Lord Bassam of Brighton: My Lords, the Government have announced their attention to accept the recommendations in the Barker review on housing supply that regional housing boards be merged with regional planning bodies and that the merged role be undertaken by the regional assemblies. This transfer will take effect later this year.

Baroness Byford: rose to call attention to water supplies in the United Kingdom; and to move for Papers.
	My Lords, I speak on behalf of my noble friend Lord Trefgarne.
	The rain figures over the past 18 months have been alarming. In the past two winters, rainfall across England and Wales has been below 90 per cent of the long-term average. The areas served by Yorkshire, Southern Anglia and Severn Trent received only 51 per cent of their normal deposits over December and January.
	Also alarming, however, are the figures for leakages. Here in London over 30 per cent of the water mains are more than 150 years old. They were installed over a fairly short period, and built to last. It is time they were renewed, and in my opinion it is not reasonable to expect the current generation of water recipients to pay the full cost. I wonder what discussions the Government have had with the water companies over this matter, or whether, as has been the practice in the past, the water companies themselves are due to bear the full cost, which is then passed on to recipients of water.
	Were the Government to give up their proposed spending on identity cards and various other national databases, which they seem to hold so dear, there would clearly be funds to replace our current system of elderly water pipes. Burst water mains in London are possibly more frequent and inconvenient than in most other places. As we have all experienced on many occasions when we are driving to and fro, there are invariably roads that are taken up and repairs being made. A proper replacement programme should start in London and then perhaps move, water region by water region, according to the leakage priority. I would be grateful if the Minister would give us his thoughts on that important issue.
	I have read various speeches and looked at announcements and analysis concerning the water problem. They have one thing in common: a sticking-plaster approach. The gradual reduction of water pressure may reduce leakage rates, but it will affect water flows within buildings. How many of us have been slightly scalded by our showers, only to find that the water pressure has been reduced by perhaps a burst water main nearby? How much will be spent on installing pumps to boost water flow rates in office blocks, high-rise buildings, schools and hospitals? Has anyone calculated the extra cost of maintaining those pumps?
	Several water companies are bringing in a ban on car cleaning. I wonder whether the Government fear that might cut across the legal requirement to keep one's vehicle sufficiently clean and that the visibility, particularly of the number plates, is not impaired. Will the Minister reflect on that?
	Water companies have obviously tried to address this issue themselves. The whole question of water metering was debated fully when we took the Water Act through this House a couple of years ago. I know there are some households that fear it, and it is important that we ensure that families, particularly those on low incomes, will not be jeopardised. What consideration has been given to those who will be forced to have water meters? What arrangements will be made for some help regarding the amount of water they use? If you have large families—and often those on low incomes have one or two more children than some others might—there is obviously greater pressure on the amount of water you use.
	Drought orders and drought permits restrict access towards supplies. During our discussions of the then Water Bill it was made clear that many rivers were even affected by unsustainable levels of extraction. We were lobbied by users, particularly by the horticultural sector—especially the watercress growers—who were very threatened by the new legislation. Hitherto they had not needed a licence, but they are now likely to be refused one because the businesses that had to be licensed under the previous law were taking all that rivers could bear. The Minister will know only too well that vast areas of England are totally reliant for the production of their crops and for food supply on a steady supply of water. That is particularly true of potatoes, carrots and other horticultural products. I could name several, but I need not because the Minister is nodding and appreciates the difficulties they face.
	Who will decide which current licence holders have their business restricted—or even ruined—by a drought order? Will this be a matter for the courts, or is there a mechanism enshrined in direction or guidance that will arbitrate? How much better it would be for the Government to accept that it is unfair to place the whole burden of pipe renewal on current water rate payers, and that funds should be reallocated to help them. Does such a decision lie with the Environment Agency alone, or do the Government have overall responsibility? Who, at the end of the day, will take responsibility for the whole water supply?
	I know that when we debated the then Water Bill in Committee there was unease about the Minister taking responsibility. Under the pressures we face now, it needs to be clarified whether the Environment Agency or the Minister himself is responsible. We have been assured by the Minister that sufficient water is available to serve all the new housing projects planned for the south-east. We need to seek that reassurance today. Given the likely continuing climate change effect, the problem will only worsen in the coming years. This is where Defra and the ODPM find themselves in different camps. The house-building plans of the ODPM give most people a feeling akin to the old saying, "Somebody has just walked over my grave". We do not need to stop and think hard about it: we know that it is a ridiculous plan to increase water consumption in an area of acute water shortage without adequate plans to ensure that the water supply will be maintained.
	The Environment Agency stated that the drought is most severe in Kent and Sussex. The Commons Environmental Audit Committee judged that,
	"areas of the South East are already being supplied water by an unacceptable and unsustainable abstraction regime in both winter and summer months".
	It did not qualify that statement with any reference to drought; it considered the situation to be unacceptable in all circumstances. Defra, on the other hand, continually claims observance of scientific advice on all matters for which it is responsible. Does the continuation of house plans in the south-east indicate that Defra and scientific observance counts for much less than the obsessions of the ODPM? Or is responsibility for the environment a moveable feast? Others have said before—and I repeat—that it is a question not just of the amount of rain that we are not having, but of the pressure on the very water table itself, as well as on the river flows, and of the ecological impact. The forthcoming water framework directive, which we have to enforce, puts extra responsibility on us, as a country, to manage our river flows and ecological impact, and to have regard for our wildlife.
	The February 2006 Postnote, Balancing Water Supply and the Environment, issued by the Parliamentary Office of Science and Technology as its 259th release, makes this particular point:
	"Public water supply . . . accounts for 45 per cent of all abstraction".
	Postnote goes on to say that the security of the public water supply is measured as the difference between water availability for the water supply and the water demand. It says that proposals for increasing water supply security and meeting projections of increased demand already include reservoirs, desalination plants and compulsory water metering in specific areas. The reductions in current supply levels to protect the environment could result in greater justification for these options.
	About meeting the environment's water needs, the document goes on to say:
	"The only justification for not meeting protection requirements is an imperative reason of overriding public interest. For sites hosting a priority habitat or species, the only public interest considerations",
	that can overtake that are obviously,
	"human health or public safety".
	Again, in referring to the impacts, Postnote states: "In applying these reductions", the Environment Agency,
	"is duty-bound to ensure that PWS is not destabilised. However, there is no definition of what constitutes a 'stable supply'"—
	perhaps the Minister can tell us in his winding up—and what is,
	"an acceptable environmental cost for its maintenance".
	Postnote continues:
	"In line with government advice, the",
	Environment Agency,
	"is initially proposing to collect £85 million through the abstraction charging system to fund licence revocations at Natura 2000 sites where a real and current environmental risk can be identified".
	Will the Minister also enlarge on that in his reply?
	The whole question of water supply is key to all of us. We cannot live without a steady water supply. I have tried to refer to the effect that it has on us as individual consumers and householders, on those who grow our crops and our land, and on future food security supply. I have also tried to reflect on our new and ever increasing responsibility to the environment and wildlife. I am sorry that my noble friend was not able to be here to move this Motion, but it gives me great pleasure so to do. I beg to move for Papers.

Lord St John of Bletso: My Lords, I am grateful to the noble Baroness, Lady Byford, as well as the noble Lord, Lord Trefgarne, for introducing this increasingly important issue to the attention of your Lordships' House. It is appropriate that we should discuss water supplies today because so many reservoirs are standing at perilously low levels across the country. The subject has moved to the top of the public agenda and it will remain there, no doubt, through the summer months that lie ahead.
	I would like to focus my remarks on two specific aspects: first, the extraordinary wastage of water through leakage, which has already been highlighted by the noble Baroness, Lady Byford, and, secondly, what measures are being taken to limit demand, both today and in areas of future development. There is no doubting the seriousness of the situation, not only in the United Kingdom, but around the world. The global statistics of water supply make stark reading. Even though two-thirds of the Earth's surface is made up of water—which can easily, but at high cost, be turned into drinking water with the help of desalination plants—only 1 per cent of the world's water is drinkable. It is no wonder that the United Nations Environment Programme ranks water shortage alongside global warming as the two great challenges facing the world during this millennium.
	I found the article in the Sunday Times two weeks ago on waste management entitled When the Rivers Run Dry What Happens When Our Water Runs Out? particularly alarming. As we know, 70 per cent of the water supplies in south-east England come from underground sources. The levels of these sources are well below average after two consecutive winters of below average rainfall—the driest period since 1933. The problem is not just in the south-east of England. The spring that has been supplying my house in south Wales for centuries dried up at the end of last summer. While it is now flowing again, I have no doubt that the problem will recur. In Britain, our daily personal consumption—drinking, cooking, washing and flushing—is about 150 litres per person. However, I was alarmed to read how much water is consumed in the growth of our crops. Nobody can be complacent.
	Against this background of diminishing supplies and the fact that three water companies have sought legal powers to ban non-essential use in south-east England, current levels of water leakage are alarming. In England and Wales alone, each and every day more than 3.5 billion litres of water are lost through various leaks in the system. It is not surprising that Ofwat has warned several water companies that they must take action to avoid future problems. The situation is bad, but it has been worse. In the year until March 2005, leakage stood at 3.6 billion litres a day. That has been marginally reduced by continuing investment in water resources and cuts in leakage from the mains.
	Thames Water, the country's largest supplier, has had some success in addressing the problem of leakages. The company now employs more than 300 two-man teams working to find and fix leaks across the region, making more than 700,000 repairs every year. That maintenance system is coupled with an ambitious programme to replace London's Victorian water mains, half of which are more than 100 years old. Such measures have reduced leakage in the Thames region by approximately 30 million litres a day. Ofwat has rightly stressed the need for similar measures to be introduced by other water companies, notably Southern Water, Dwr Cymru and Severn Trent Water.
	I am no expert on the subject, but I would be interested to learn what new technologies are being developed to manage and monitor water leakages more effectively. Certainly in the telecommunications industry, where I have more expertise, within minutes of a problem developing in a telephone network the authorities are able to isolate and identify it easily and swiftly. Perhaps the Minister would outline what measures are being taken to investigate whether similar technology can be used to manage the country's water supplies.
	It has also become clear that new measures are required to control the demand for water in the United Kingdom, particularly in specific areas in the south-east such as Folkestone and Dover, which are threatened by drought. Officials in those areas have warned that extreme measures may have to be introduced. When the noble Baroness, Lady Young of Old Scone, the chief executive of the Environment Agency, warns that our water supplies are at risk, we should recognise the seriousness of the situation.
	What can be done to limit demand? The solution may lie in a successful campaign to change the habits of the nation. That may be easier said than done. However, it is estimated that if everyone in England and Wales simply turned off the tap while brushing their teeth in the morning, enough water could be saved to supply 600,000 homes. I dare say that the perennial finger-wagging and the idle threats will not make much difference, but a dynamic and creative campaign to educate the public on the seriousness of the situation, and the relative simplicity of at least part of the problem, could prove highly successful. Perhaps the Minister will confirm whether such public information programmes will be implemented.
	The noble Baroness, Lady Young, also called for compulsory metering, based on the sound principle that people will start to take notice only when they feel the impact on their wallets. The introduction of meters to ensure that people pay for the water that they use—rather than rates—will surely assist the process of controlling the demand on water supplies. At present, only 28 per cent of homes have water meters, although I understand that the Government have a target to reach 75 per cent within 20 years.
	Folkestone and Dover Water Services has already been successful in its application for "area of water scarcity" status, meaning it can accelerate switching its household customers to water meters. This programme is mainly voluntary, but the company may soon be able to charge all its customers according to how much water they use. The strategy will help match limited supplies to resources. This is surely the key to preserving adequate water supplies. Will the same status be granted to other water companies?
	The Environment Agency should also be commended on its work with water companies in developing water resource management plans, which look ahead 25 years and include projections of current and future demands. These plans are regularly updated to account for factors such as projections of household numbers and occupancy rates and the implications of climate change. It is particularly significant and valuable that these water resource management plans have become statutory under the Water Act 2003.
	The most severe challenges lie in the south-east. The high levels of housing growth—already mentioned by the noble Baroness, Lady Byford—envisaged in the region require careful planning to ensure that development does not proceed ahead of secure water supplies. New or enlarged reservoirs and pipeline transfers need to be developed, and it is important that the Environment Agency continues to work closely with the water companies and development agencies to ensure that sustainable solutions are achieved, both in the south-east and in other areas of the country where sustainable communities are planned.
	It should be stressed that the present challenge of controlling our demand for water does not lie only with this country's households. The responsibility also rests with industry, which accounts for almost a third of usage. Envirowise, a government-funded programme that advises companies on improving their resource efficiency, suggests that UK industry uses no less than three times more water than is necessary each year. According to Martin Gibson, the programme director of Envirowise, a business that implements an effective conservation technique can cut its annual water consumption by 30 per cent and enjoy substantial cost savings.
	Our water supplies will be protected and sustained by changing the habits of the public and of industry. The Government's challenge is to work with the various water companies and stakeholders to introduce regulations and campaigns that assist in this process.
	A World War II veteran once told me that there were two uses for water: for washing; and for making your whiskey go a bit further when times were hard. Such an approach would stand us all in good stead today.

Lord Lyell: My Lords, I thank my noble friend Lord Trefgarne for giving us the opportunity to discuss this incredibly important subject and my noble friend Lady Byford for opening our discussion with such a powerful speech. Your Lordships will be pleased to know that many of the points that came to my mind have already been made, especially in relation to supply, leakages, Ofwat and the various authorities that have responsibility either for watching what we do with water or for supplying it.
	I was very pleased that my noble friend referred in the Motion to water supplies in the United Kingdom. I have one or two points to stress to him and your Lordships about that later. All my life, I have been involved in farming, but I also have clear memories. Although I was too young—in fact, I was not in this country—to remember the great floods of 1947, but I recall that in 1953 there were enormous floods. They were caused not so much by rain, but by wind storms, which affected us in Scotland and others throughout the United Kingdom. Your Lordships may well remember that there were 200—or was it even 300?—fatalities in north, east and south-east England. In my schooldays, in 1954, the Thames flooded right up to the steps of Eton College. That was not in the flood season, spring; it was in autumn—in November. That was before the days of the Thames Barrier. I have no idea why it happened; it might have been to do with drainage, but there was especially heavy rainfall during November.
	I remember that, during my schooldays in Angus, the two years of 1955 and 1959 were incredibly dry. I have good reason to remember that because in that area, which I think is known to my noble friend Lord Astor and certainly to my noble friend Lord Glenarthur, there were springs that almost dried up, but they have come back. We have records going back for 250 years, but those years were the two driest that we have ever experienced. In east Scotland, 1975 and 1976 were two particularly dry years. Indeed, your Lordships may remember that the last time—as I recall—that we had standpipes in London and the south-east was in 1976. I am delighted that my noble friend Lady Shephard agrees, because Norfolk was even drier than parts of Angus.
	I wonder what cures there are. The noble Lord, Lord St John of Bletso, made an enormously powerful speech about industry. I have not been involved in industry but, as an agriculturalist, I know and am becoming increasingly conscious of how much water particular crops require. Vegetables and livestock require much more. I wonder whether there is a cure. We have heard several powerful speeches about repairing the infrastructure. The nearest authority to us is Thames Water. We have heard what it is attempting to do, especially to repair 100 year-old water infrastructure beneath the streets of London.
	We are also receiving increasingly helpful advice, using the happy word "efficiency", on saving water. Much of that is about turning off the tap while you brush your teeth, but it gives great pleasure to the younger children of the sons and daughters of your Lordships when they are told to bath only once a week or once a fortnight. They are dancing with joy about that. However, more constructive advice is available from water companies, Ofwat, and elsewhere. I am sure that we will get friendly advice from the Minister later.
	However, there is appears to be confusion about building. My noble friend Lady Hanham mentioned this. First, there is the question of supplies. I see that my noble friend Lord Astor of Hever has just joined us. He may want to speak later. I recall that there have been exceedingly serious floods in his area twice, if not three times, in the past five years. That has ongoing implications for householders and people living and working in that area. They are finding it difficult and very costly to obtain flood insurance for their houses, properties and businesses. So there is something of an imbalance.
	We have heard about supplies of water—not only domestic but to industry and agriculture. The noble Lord, Lord St John, pointed out the worldwide problem. The percentage of water that can be used for drinking in the United Kingdom is perhaps not too different. The water companies—indeed, the water industry—are also involved in many other aspects that add to the cost of finding, saving, preserving and looking after water; namely, the standards—that dreadful word—of purity. Your Lordships may remember the fierce, emotional and impassioned debates on putting fluoride into the water in the south-east of England. But I am very grateful for the efforts being made to upgrade the purity of water throughout England and Wales, let alone Scotland, and particularly in the Thames area.
	I hope that the Minister will be able to give us guidance on several fronts. I warned your Lordships that I was delighted that my noble friend's debate referred to water in the United Kingdom, because between 1984 and 1989, I had purported responsibility in Northern Ireland for what was called drainage. But I was not responsible for the alteration of that name during my time there to "water course management". It did not make much difference; we still had particularly serious flooding problems. The advice that I got—I doubt the Minister will be able to correct me when he gets better advice—was, "Oh, this is quite safe. It happens only once in 50 years, or twice in 100 years". I began to ask questions after we had particularly serious floods on the flatlands of County Londonderry. I was particularly aware of, and learnt a great deal about, drainage for forestry and agriculture there but, through drainage, we have undone, or corrected, perhaps 50, 100 or 200 years of what our ancestors used to call flood plains. These, too, have their part to play in preserving water.
	I wonder what can be done. No doubt the Minister and others will have quite a bit to say about water supplies and the grid. They will certainly have something to say about co-operation between the water companies. In the words of one trader, "Every little helps". Every single litre that can be saved is excellent. Perhaps, beyond my lifetime, a water grid might help. It might not help in the island of Ireland, but there is certainly quite enough water in Scotland—we like to use it—in the event of further extensions to the north. We know of the enormous success of the Kielder and another area—I think it is called Catcleugh—which I pass through three, four, five or even 10 times a year. It goes back to the 1930s and is part of the Kielder system. For each of the past three years, it has been adequately filled up. So there is water in the land mass of England. Perhaps the Minister will say that there will be a grid beyond the lifetimes of many of us, including those of the children who may not want to take baths at this moment.
	I am delighted that my noble friend Lord Trefgarne has secured the debate today, because I suspect that tomorrow and over the weekend he may require considerable supplies of water of the mineral variety and perhaps others.

Lord Dixon-Smith: My Lords, I am immensely grateful to my noble friend Lady Byford for stepping into the breach when my noble friend Lord Trefgarne unfortunately failed to appear at the appropriate moment. I sympathise with him, and am very glad that my noble friend Lady Byford took on the task. As always, she covered the subject with great authority and in considerable detail.
	I have an interest to declare: I am a farmer, and in 1962 I constructed a major winter storage reservoir on my farm, so of course I have a water abstraction licence. Much of what I say will be the consequence of what I learnt from that experience. One of the things I learnt gives me a frisson of terror at the state we find ourselves in today. Regrettably, as water management has in a sense become more centralised, it has become more and more short term. I wish to go right back to what has been happening to the water environment.
	As my noble friend Lord Lyell said, it is only five years ago that we were discussing major flooding across parts of the south-east. All the talk then was about the need for flood protection and the dangers and difficulties that that presented. Here we are, five years later, discussing the complete opposite—the problem of drought. The British climate is reliable in its unreliability. I do not know what we will be discussing in a year or two, but it may well be something rather different. Let us look back to the beginning of the 20th century. All our major and minor rivers had along their entire length water mills which relied on water for power. As a consequence, water was retained in the rivers, giving it more time to soak into subterranean watercourses.
	In the third quarter of the 20th century, we drained our agricultural land very effectively and efficiently. As a result, the water, instead of soaking down into the substrata, runs off the land with remarkable speed. When I was rather more engaged in farming than I am now, I could see water coming out of the pipes that I had put in—with some aid from the government—within a couple of hours of a good rain.
	When I was born, the population of this country was 45 million. After the war, when I entered public life, it was 55 million. Now it is 65 million. The increasing urbanisation that has resulted allows no water to penetrate into the sub-soil strata. All the rain that falls runs straight off the top, with the possible exception of London, where, as has already been mentioned, massive leakage takes place. London is one of those rare places in the country where the water table has been rising. How far leakage from the ancient mains—a sinking fund should have been built into the water supply system when it was created, but it was not—contributes to the rise in the water table, I do not know, but it must be a factor. I merely make the observation that when water leaks out of the mains, it is not lost—it goes into the ground and it is available for recycling and re-use.
	It is important to remember that our water environment today is very different from that in the past. If we clear water off the surface of the ground, it follows as night follows day that storage and management measures, if they are required, will inevitably be surface measures.
	There have also been major structural changes in the way in which we look after our water. When I was a young man, all our water authorities were local. For most of the country, companies were small and dealt with small, local problems, although it became a massive system in the metropolis as it had to do. As companies ran into increasing problems, we developed regional water authorities, which were subsequently put into private hands and became private monopolies. As a consequence we developed a regulatory regime, with Ofwat supervising the private utilities to prevent improper profiteering, and being remarkably successful in doing so. Its policy seems always to have been very strongly consumer-oriented to keep the price of water down. When water utilities factor that into the calculations of what they can do, they come up with restrictions on investment. Under the regime which existed before all the organisational changes came about, major reservoirs were still being constructed in this country. In Essex, we benefit from a river basin transfer scheme which successfully keeps us supplied most of the time—Essex is one of the driest areas of the country, so it is needed. However, under the new regime, it is a matter of regret that new reservoirs have not been factored in, although they are beginning to be looked at because of the increasing difficulties that we face with our water supplies.
	I come from one of those parts of Essex which would compete to be one of driest spots in England. A number of us in Essex like to enter that competition. I have to say, to my regret, that mine is no more than one of the drier spots of Essex; there are others which are far worse off. However, a study carried out in 2004 by Anglia Polytechnic University of the East Anglian region, which is the driest region of the country in all normal circumstances, showed that in a normal year only 20 per cent of rainfall was utilised. In a drought year, that proportion rose to 65 per cent. All the rest of it went out to sea. In other regions of the country, the situation is generally better: there is more rainfall and more run-off. Some regions in the west country and the north have three or even four times as much rainfall as Essex.
	What still causes me difficulty when we discuss this subject is that we have plenty of water, but we do not manage that water. Whether a national water grid or, as a friend of mine proposed 30 or 40 years, a canal running down the 300-foot contour of this country from north to south is a possible solution to this problem, I do not know, but the Ely Ouse scheme which transfers water to Essex is an example that we shall have increasingly to follow whether we like it or not. How far are measures such as this really to be factored in? Even if they are factored in, we shall still have an acute short-term problem, as Members have constantly pointed out today, because of the commercial development attractions in the south-east of England which do not arise elsewhere. Other parts of the country have problems with water supply for the same reason; namely, under-investment in conservation and storage. This will be a factor across the country. The noble Baroness, Lady Shephard, rightly mentioned cost. Yes, there is a cost, but cost is higher today—or tomorrow, because some of the schemes will not come about for another five or 10 years—because we failed to invest in the past. It gives me no pleasure to say it, but I do so with some authority.
	There are no easy answers to this problem. Compulsory metering, which is advocated, must be a part of the solution, because there is no incentive to look at the use of water by households which pay for it on the basis of rates. The suggestion of the noble Baroness, Lady Miller, that everyone should be made to install the most water-economical systems during a house renovation, is quite correct, but another difficulty is that most house renovations do not require permission from anyone. Perish the thought that we should get into the business of yet more regulation of what people can or cannot do in their own homes. It is a problem. Of course the market solution would be to increase the price of water. That may be an uncomfortable reality. I do not begin to know what the answer is. What I know is that regrettably over the past 10 years the situation has grown worse without the Government beginning to consider the issue seriously and proposing solutions. I accept that this is not an easy area today because ultimately we are dealing with an industry that is now in private hands. While, thankfully, that gets it out of the dead hand of the Treasury's financial controls it means that we have to find more market-oriented solutions to the problems, and need to recognise that they will have a cost.
	If we start on that matter now we may begin to improve the situation in 10 or 15 years' time if we are lucky. For the interim, we shall live on the knife-edge that has been described so ably by so many noble Lords.

Lord Grantchester: My Lords, I am grateful to the noble Lord, Lord King, for introducing this debate today on the independent delivery agency, the Rural Payments Agency. At the outset, I declare my interest—as a Peer sitting on the government Benches—as a dairy farmer in Cheshire and as a director of Dairy Farmers of Britain, a co-operative of some 3,500 dairy farmers. I have also been the president of the Royal Association of British Dairy Farmers and chairman of the Cheshire branch of the CLA, as well as being a member of the NFU. However, my words today are spoken merely as a dairy farmer.
	The Government and the Minister at the time, my noble friend Lord Whitty, are rightfully to be congratulated on the announcement on 12 February 2004 that, as part of widespread and continuing reform of the common agricultural policy, England would introduce the single payment scheme on the dynamic hybrid model. Farmers' payments would be based 90 per cent on historical claims and 10 per cent on the area farmed. Over time, this would change from historical predominance to payments per acre of holding. That was part of the process of changing payments to farmers from being production-based towards being based on environmental and other benefits. Payments cannot be justified on some ever-receding historical production level.
	While this system is obviously more complex than the purely historical system introduced by Scotland and Wales, among others, that announcement was now more than two years ago. However, complexity has been compounded by further changes—for example, changes to the definition of who is eligible, what is eligible and what are the requirements with adjustments for hardship and national reserve cases, appeals, treatment of common land and set-aside. One might ask whether it was then wise to overlay IT, office and staff changes. There has not been a settled team working in a settled work environment.
	Does that entirely excuse what other noble Lords will be describing today? I believe that most of the problems are consequential on the fact that the mapping process that is obviously required for the area element of the payment has been ineffective. I know that the noble Earl, Lord Erroll, will come up with some interesting theories later concerning that. From my farm, I have received differing maps about every two months or so, each one bearing little relation to the map previously sent to me and no relation to the corrected maps that I return each time. Why should that be, given that I had very adequate maps provided under the IACS system previously applicable?
	It is extremely disappointing that this mapping process has not been completed prior to the payment window opening. As I understand it, of some 120,000 applicants, 55,000 have been validated for payment—although I understand that some of these are still incorrect—leaving 65,000 invalidated and with notification of entitlements unreliable. My noble friend cannot be held responsible for the operation of this delivery agency. However, he will be anxious that its performance will be reflected in people's assessment of the Government and their administration. How can my noble friend be told and repeat on 2 February that the bulk of payments would be completed by the end of March and then, some mere six weeks later, on 16 March, be told that only 7 per cent of claims have been paid with only two weeks to go?
	Can I tempt my noble friend with some helpful suggestions? It would help customer relations enormously if the agency's attention could change from overindulgent procedures to avoid disallowance and from focusing on the potential fine for failure to implement the EU regulation by June. Instead, let us see what can be done to implement partial payments. After all, 90 per cent of claims are on an historical basis. We should change the process to one in which staff operate as case officers for individual claimants rather than undertake the task-based approach. We should allow communications with claimants so that they can understand to some degree where they are, what they can tell their bank managers and what probable outcomes they must plan for. We should state on entitlement statements the calculations used to arrive at an award, so that claimants can follow and check the validity. We should announce that penalties for late filing will be waived so that errors are not needlessly exported into next year's system. Also, we should get the outsourced mapping contractors into the RPA offices to work as a team, eliminating any IT glitches.
	No doubt the Minister is seeking deadlines on which he will expect answers to many problems. Will he say what disciplines he has called for to give this House confidence that everything is being done to expedite matters? The lack of funds into the rural economy is resulting in severe stress, anxiety and economic hardship. I understand that some £10 million as interest is being transferred from farmers to the banks. That money is urgently needed to help the transition that we all seek towards the revitalised sector.
	The SPS system is not the only source of funds that the RPA processes into the rural economy. I also refer, as far as livestock producers are concerned, to the compensation payments consequential on disease, especially bovine TB. The House debated the Cattle Compensation (England) Order 2006 on Friday 10 February, although regrettably I was unable to be present.
	I am aware that one must be extremely careful when venturing into areas that impact directly on one's own affairs outside this House. However, I can assure my noble friend that this system is in need of urgent improvement. Although it may be effective for a large part of the cattle population, 47 cattle categories are inadequate to do justice to the multitude of herds, ages and standards, especially breed improvement programmes undertaken to add independently assessed value to a farmer's herds. Moreover, these breed improvement programmes have as their main feature longevity and welfare implications. This tabular system is based on the auction system whereby a vendor has to rely on what a purchaser is prepared to pay. It entrenches the system whereby farmers must accept what is offered for their produce, be it cattle, milk, cheese, beef and so on. The tabular system fails to take into account private sales where the vendor can, to some extent, name his price. It also fails to recognise that many herd-improving cattle are not traded at all, as they are retained to produce and pass on genetic superiority to their offspring.
	Holstein UK, the registration body for pedigree black and white cattle, which also undertakes registration programmes for six dairy breeds and one beef breed, has been working with the National Audit Office to authenticate price banding according to independently set breed improvement programmes. Information is independently verified by the Centre for Dairy Information. The tabular form is blighting the value of herds, reducing fair comparisons and fair compensation to perhaps the top 20 per cent of cattle and their owners. Genus, a publicly quoted company, is to be congratulated on breeding a bull called Picton Shottle, which has been independently assessed as being internationally superior. His services are much in demand. God forbid, but is he to be valued on the same basis as a herd-bred pedigree bull? I suggest that the NFU should still advise all members to undertake an independent valuation of cattle caught by bovine TB and to attach it to their form, BT1(1/06), on the valuation of bovine animals. We might then be able to follow this up.
	I mention that as a further example of resources that are not getting through to rural areas. I could also include diversification grants, set up to encourage new enterprises. My noble friend has direct experience of difficulties that can be encountered if the pace of change is too great. While I applaud the enthusiasm for change shown by my noble friend, perhaps I can tempt him to be aware that these are extremely testing times in the rural economy and that more time may be required to effect a lasting transformation.

Lord Desai: My Lords, I have no agricultural interest to declare. I am about the only speaker this afternoon with such a problem. My first job was in agricultural economics in America, when I was involved in looking at payments for dairy farmers. That convinced me that every payment system was a nightmare.
	We are all grateful to the noble Lord, Lord King, for introducing the debate. As he rightly reminded us, we have had some serious disasters on the agricultural front in the past 10 or so years. While I have been here—15 years—we have had BSE, which was a major disaster, and then we had foot and mouth disease. The feeling I get, having read the debates and having talked to people, is that, as serious as this situation is, it is not on the same scale as either foot and mouth or the BSE crisis. I am not trying to be complacent, but I am putting down a marker.
	In the debate in another place yesterday the honourable Member for Vale of York said that normally farmers carry a debt of around £50 million per month. In the foot and mouth case, it went up to £80 million. She gave an estimate that due to this delayed payment £8 million had been added to the debt burden of farmers. Those are her numbers; I did not make them up. We are talking about, although I do not want to minimise the problem, a 16 per cent extra debt burden on the farmers. This may be unrealistic. As I said, I am not a farmer. I am quoting opposition numbers, rather than government numbers. I will quote government numbers in a minute.
	Again without trying to underestimate or underplay the crisis, the Minister said yesterday in another place that 23 per cent of payments had been made by close of play yesterday. That is not anywhere near 96 per cent, which was the target, but 23 per cent of payments had been made by 29 March. My guess, although I am not a Minister, is that it should not be beyond human ingenuity to pay all the money by the end of June, which was the close of the window.
	The noble Countess, Lady Mar, asked what lessons can be learnt. Clearly, if you set up an arm's-length agency—regardless of who set it up—Ministers cannot interfere on a day-to-day basis. If somebody comes to them 15 days before the deadline saying that the whole thing has gone belly up, you sack the person concerned and you start all over again. It is bad, but I do not know to what extent you can simultaneously have a devolved agency to do the work and hold the Minister responsible on a day-to-day basis for what that agency does. People who have been Ministers can probably tell me more about honourable resignations in the past, mentioned by the noble Lord, Lord King. He gave the example of the noble Lord, Lord Carrington, who we all admired when he resigned his position as Foreign Secretary, but I genuinely do not recall how many people resigned in the BSE crisis. I do not think that resignations would help a single farmer get even one extra pound tomorrow. Resignations are, however, a political thing.
	Our first lesson is that the whole relationship between devolved agencies and ministries has to be rethought. Second, again and again we have computer systems that do not work. This morning the Financial Times carries the news that Accenture is going to pay £294 million to the Department of Health for a computer software glitch it was responsible for—that is about half a billion dollars. Mistakes like that happen with companies like Accenture. Fujitsu also has noted that it is going to lose money on the software system that it was providing; it has sold its software subsidiary. Clearly the computer system has gone wrong. Again, we have to learn how to do this properly. If there is a reform of CAP going on and the payment basis is changed, it behoves the Government and the agency to start changing the system ever so gently from being based 100 per cent on the new method to a mixed system.
	I gather that, with the new system being based on land area, maps are imperfect. Maps were not needed before, because the payment system was not based on maps. If you suddenly want accurate mapping of all of England, it should have been done on time, but it turns out that only the Reading office of the agency can do accurate mapping. Again, the honourable Member for Vale of York asked yesterday what an office in Reading would know about north Yorkshire. I presume that it can read the maps. It does not have to know the problems of north Yorkshire; it only has to know something about the mapping.
	The chief executive has been sacked and the new executive put in operation. I have to compliment the new person. He is not giving a hopeful and totally unrealistic estimate of how soon payments can be made, unlike his predecessor. It is a bad situation and people are suffering—I do not deny that. It is difficult, if not impossible, for the Government to pay interest on delayed payments. We have had the discussion about the Government meeting their payment obligations on time over many years, but we have to remember that the resignation tomorrow of every Minister in Defra would not solve any farmer's problems. Rather than calling for resignations, we have to learn the lessons, and next time that happens, we will be much better prepared.
	I will make one remark more as an economist than as a farmer. It is very surprising that with an industry historically based on uncertainty in payment receipts and uncertainty of weather and so on, banks are still not able to cope. Banks should have already invented instruments of credit that would take on board such uncertainties. That is a market failure. I am very surprised. After all, people have been doing this for ages. Why have the banks not up till now invented an efficient credit instrument that will cushion farmers? Why are there no good insurance schemes? If there are, I would like to know. This is a classic case for insurance—again, I speak as an economist. One can see clearly the uncertainties of the profession. There should be in place an insurance scheme. This is again an example of market failure.
	In the longer run we ought to worry more about those issues, so that the recurrence of such a problem will have a lesser impact on people who are clearly suffering, than about who is in office or resigning Ministers.

The Earl of Erroll: My Lords, I am sorry. I arrived just after the debate had started so I missed that announcement.
	I thank the noble Lord, Lord King, for providing the opportunity to debate this subject. I declare an interest up-front in that I am married to a farmer. This situation, plus all the changes associated with it, has been causing us a lot of grief over the past couple of years and has wrecked a year of our life. We have had to absorb an amount of paperwork on top of all the other legislation that has come out relating to health and safety, cross-compliance issues and so on, so it is not just a simple matter of trying to get one little thing right.
	I feel slightly sorry for the Minister because I think that he has been badly misled by the agency. I have always been very concerned about the concept of agencies being hived off—almost as part of the Civil Service but not quite—so that we could never get to grips with them in Parliament. They could always hide behind their remit and were not directly responsible. That allowed a loss of control and a loss of information to occur. I am concerned that we are setting up Natural England in the same way. I can see that we are not learning from our mistakes, and I think that hiving off responsibility to large agencies is very dangerous.
	My background is in IT and software development. I wrote a lot of farming software years ago. I then married a farmer, and I have also learnt how to do digital mapping as a result of the move to the mapping system. My wife will not sign off maps unless she knows that they are 100 per cent accurate. The justification for relating what has happened to us is simply that the same thing has happened to 65,000 others. Those people cannot get their money either, and I hope that some lessons can be learnt.
	I say to the noble Lord, Lord Desai, that the situation is very serious. Anecdotally, we have heard of three suicides locally. The trouble is that the problem is exacerbated by the paperwork and everything surrounding it. People did not go into farming to farm paperwork. If farmers are already at their financial limits, they cannot extend their overdrafts. Therefore, although the debt burden overall may not seem terribly serious, individual farmers are at their limit. Speaking personally, we are able to weather the problem at the moment but I shall give noble Lords an idea of the situation, given that the farming subsidy structure has been relied on for many years and cannot be cut off overnight.
	The last payment to my wife, who is an arable farmer, was in November 2004. Normally she would have been paid in November 2005 and that would have paid for seeds, fertilisers and sprays so that she could continue farming over the next year and pay off some of the debt while the harvest was being sold from the previous year. Currently, she has not received a payment for 16 months, as opposed to a year, and that has to be covered somehow. She has to buy the materials to continue farming for the next year and that is very difficult—her money has to come from somewhere. Without a happy bank manager, basically you have to fold. For arable farmers, the crunch point is now. If they cannot get further loans, they will have to go out of farming—there is no other option. That is why the situation is so serious.
	I shall try to describe the root of the problem. The digitisation exercise was started several years ago but, at that point, we had an arable area payment system which depended on certain definitions of land and so on. As the digitisation process went forward, it was not properly explained that there would be new rules on what qualified for future payments. The single payment system and the entry-level scheme suddenly came in but there was no real information on them until much later. In September 2004, we arrived at the point where the maps were based on an old idea of what should be submitted to Defra but a whole lot of new stuff then qualified and had to be included, so suddenly all the maps needed to be revised. I do not think that anyone had realised that until it was far too late.
	We submitted the necessary corrections and registered for "fast track" because we realised that the entry-level scheme money would also be vital to the profitability of the farm. To do that, we also needed to get on with our woodland areas and so on. However, the maps did not appear and we could not apply for the entry-level scheme in August. We started to panic and telephoned the agency. Then, around October, we were told, "We're terribly sorry. It's all going to slow down again as there has been a change of policy". I think that that is probably when university students stopped being directly employed to do the work and the department switched to an outsource process. Perhaps that had been planned earlier—I do not know—but there was a huge slowing-down in the process.
	Months and months after submitting our application, just before Christmas on 23 December, we received maps covering about 80 per cent of the farm estate with a requirement, set out in an abrupt letter, to return them within seven days—not working days but seven days over Christmas—if we wanted to make any changes.
	In the meantime, in trying to enter the entry-level scheme we also established from the Rural Development Service that a lot of the land had been lost and was no longer connected, so nothing tallied. The maps that we received in December were not too bad. When I looked at the overall hectarage of the 80 per cent of the land covered by the maps, it came within 0.04 hectares of what I thought it should be according to our digital maps. Therefore, we concurred because at that stage we were both working from Ordnance Survey landline-based data. We only needed to get the remaining 20 per cent registered and we could then go ahead with the entry-level scheme.
	We had a few problems. We got a note from the Countryside Stewardship Scheme, which was clearly working on out-of-date maps with different areas and so on. We also received material from the customer services centre in Newcastle, which showed that the staff there were working from maps with changes on them which went through from 23 December, and from the old 2004 pre-change maps. There was obviously a muddle.
	In March, we were worried as we started to receive maps with completely new areas on them. I realised that I was probably looking at a new mapping system based on the Ordnance Survey master-map series, and that maps had been changed in the middle of the operation. We had problems because people had made arbitrary decisions about where the field boundary lay and that did not concur with the old information. That was particularly the case with the old Countryside Stewardship Scheme agreements, where a boundary might date back well before certain other things had changed in the fields. Therefore, if you did not go back to the old boundaries, you would have to rewrite legal agreements as well. We were left in confusion and with problems.
	Yesterday, we received some maps and we are now down to only two-thirds of the farm estate being mapped. We seem to have lost an awful lot, so I suppose that I have to go through the whole lot and send them back again. The problem with the mapping, and the reason that it is so important, is that it triggers everything else. The maps are the key to everything: nothing can happen until the maps are agreed. Out of them come the tables from the customer services centre and therefore the entitlement statements. The Countryside Stewardship Scheme, the entry-level scheme, the farm woodland grant scheme and the Forestry Commission woodland grant schemes are triggered by the maps. The sad thing is that, according to the unverified statements sent out not very long ago from Newcastle, we were within four-tenths of a per cent of agreeing the total area for the single payment system claim, but we will not receive anything.
	Money is the key to this. I think that the Minister is responsible for sustainable farming, but you cannot sustain farming without money. An online poll in January showed that 62 per cent of farmers were already in financial trouble. I do not know whose money it is. Who is accruing interest on the billions of pounds that are sitting there? I do not know whether the amount is £1.6 billion or £3 billion—I read different articles. Presumably the Government are getting the interest on that money, so why can they not pay it out to keep farmers, and perhaps the bank managers, a little happier?
	I have a question. My wife told me that after 30 June this year, the EU will cease to have to pay this money and the Government will have to pay it from UK funds instead. Is that true? There are further problems. What happens if two payments arrive next year? What about the tax issues? Will we be allowed to refer one tax liability back to this year? We have an enormous tax hit. As you have to pay your tax up-front for the following year, that will bankrupt a few people too.
	By 16 May we have to fill in the next SPS forms, but which areas do we put on them? If we show the same areas that we put on the previous form, will we receive penalties if penalties had to be paid on that one? Will we get penalties over two years just because we are sticking to our guns and, inadvertently, did not realise that there was a mistake? We hear that there are heavy penalties with regard to cross-compliance. An eastern region farmer has been penalised 15 per cent for going over the top with some fertiliser on an FP209 recommendation. People are heavily active on the penalty side. It is sad that there is no Smithfield this year. I am sorry—I am jumping all over the place.
	In conclusion, what is the way forward? I am not sure that promoting the second in command, who was probably responsible for instituting these procedures, into a position of control is the answer. For those who have digitised their farms accurately, the digital maps could be accepted. We need to speak one-on-one with the people doing the mapping to sort out the boundaries. We need to know why they are moving the boundaries, so that we can agree them.
	We could make historic payments. Ninety per cent of the single farm payment is supposed to be based on historic payments. We know what those are, from last year. It could, therefore, be 90 per cent, as long as we know the base years being used for those of us who have rebased. We do not even know whether that has been accepted, or if the data have been lost. There are a lot of complications. I am happy to talk to whoever about how they can be sorted out, as I have quite a bit of experience.

Lord Dixon-Smith: My Lords, I am grateful to the Minister, but my copy arrived after the announcement was made. That may be due to vagaries that are beyond his control. This is part of the problem: so much is beyond the Minister's control.
	During the debate, the Minister sought to make some capital from the fact that independent service agencies were a Conservative Party invention. That was a perfectly reasonable thing for him to do. In discussions on this subject, the Minister has said from time to time that they are independent agencies, so if they give assurances that all is well, that should presumably be instantly accepted by Ministers. I would not have commented on their independence had I not found the remarks made by the Minister's honourable friend Mr Bradshaw in a debate in Westminster Hall yesterday. He states:
	"On 20 February payments began to flow as had been forecast. However, on Friday 10 March, after fellow Ministers had requested a qualified update of actual payments being made, the RPA still advised that 51 per cent.—one could argue that that represented the bulk—would be made by 3 April and that 96 per cent. would be made by the end of June. Just four days after that, on Tuesday 14 March, at a meeting with the Secretary of State, the RPA chief executive reported for the first time that the forecast of the bulk of payments being made by the end of March would not be met. He reaffirmed that 96 per cent. of payments would be made by the end of June. The next day, on the advice of the DEFRA permanent secretary, Mr. McNeill was removed from his post".—[Official Report, Commons, 29/3/06; col. 303WH.]
	What is the independence of an agency if the head of the organisation can be instantly removed? But that is not what I want to talk about today. I merely make the point.
	It is fortunate that I am following the noble Earl, Lord Erroll, because he was discussing problems of mapping, which is probably at the heart of this whole disastrous affair. I am sure that no one wants to be in this Chamber today having this debate; we would all prefer that the need had not arisen. I refer to the experience of one estate owner, and the noble Earl says that the problem goes back a long way.
	The estate owner's experience began in September 2003. Version one of the maps ran to some 32 pages, of which only three contained no errors. The necessary corrections to the remaining 29 pages were duly made and returned. Version two of the maps was sent in September 2004. He was told that it was the final version and that any adjustments would have to be made on the IACS 22 forms. Version three of the maps arrived on 16 March 2005, and version four on 4 April 2005. By the time he sent his SP5a form to the RPA on 10 May, the areas were still not agreed, and version five of the maps was received in May 2005.
	To date, there have been seven versions of the maps, none of which has been without error. By the time version six arrived, the number of errors had been reduced to six. One might think that that was progress. However, on 26 October 2005, he received version seven. Although the six errors had been corrected—hooray—something in the region of 50 new errors had crept into that version, which varied from the inclusion of tracks that appear to have been made by pigs historically crossing fields, to the disappearance of land amounting to almost 300 hectares.
	Following the receipt of version seven, a visit was made to the RPA offices in Reading in an endeavour to sort out the problem, and a new version of the maps was promised within two weeks. Having heard nothing by December, the landowner telephoned the office, and a promise was made that the maps would be produced by 19 January 2006. There has been no explanation why the maps for this estate cannot be printed, save that the RPA staff said on the telephone that the computer systems were unable to cope. On 2 March this year, the estate owner received the entitlement statement dated 21 February, stating that no payment could be made by the RPA until the claim was fully validated. In turn, the claim could not be fully validated until the digital mapping queries had been resolved.
	Over that period, the problems had gone from bad to worse rather than from bad to better. What will happen if the person's map cannot be validated? There is virtual agreement between the landowner and the RPA, but it cannot be validated for technical reasons by the date on which the payment has to be made, lest the Government lose their subscription from the European Commission for failure to make those payments. In his opening remarks, the noble Lord, Lord King, sought assurances about time limits. The indications are that, because of the mapping problems, that question cannot be resolved, or at least the Minister will find it difficult to resolve the time issue, unless he knows something that we do not know and something has happened since this lot came out.
	In case it might be thought that that is the only example, which encapsulates almost every error that could go wrong, I have another one concerning someone who applied for the entry level scheme on the environmental side in May 2005. When he got his maps back, 40 hectares of land were missing. On 27 November, it was stated that his mapping problems were nearly resolved but involved "unusual" printing, so he was told that it would take a while to complete. He phoned on 10 March to discover that the maps had been lost.
	There is a real technical problem here. The real difficulty that I foresee is that these technical problems may not be capable of solution before the date by which the payments are required to have been made under European law and practice. Heaven help the agricultural industry with having to deal with that as individuals, but the serious question for the Minister is: what happens if that finally proves to be the situation?

The Earl of Arran: My Lords, I, too, thank my noble friend Lord King for introducing this debate this afternoon. His timing is profoundly poignant. First, I declare an interest. My wife is a farmer—and a very much better farmer she is than I would ever be. Where I come from, which is on the edge of Exmoor, the sad fact is that, until the supermarkets are prepared to pay a fair price for beef, lamb and milk, the single payment will make the difference between profit and loss, and survival and extinction, and it will be what keeps the rural world going round. The disgraceful fiasco over the single payment is not only putting farmers' businesses at risk; in the north of Devon alone, it is also damaging hundreds of other small businesses that supply feed, fertiliser, machinery and 101 other goods or services to the farming community. They have not been paid because, without the single payment, farmers do not have the means to pay them.
	That situation is nothing short of scandalous. The worst of it is that it was entirely predictable. The Government chose the most complicated model of single payments that it was possible to devise. They then asked the staff of the Rural Payments Agency to implement it at the same time as threatening large numbers of them with redundancy. Finally, they relied on assurances from people at the top of the RPA, whose record has been shown to be rather less successful at delivering projects on time than the constructors of the Wembley Stadium and rather less forthcoming in their communications than the old Soviet politburo. This is probably the most incompetent piece of government administration ever known in a government department. It certainly rivals that of foot-and-mouth disease. It is utterly deplorable.
	Humility still counts for an awful lot. Perhaps the word "regret" as used by the Minister could be changed to the simple words: "We are very sorry. We got it wrong". However, I suspect that, as happens all too often, the Government could not give a toss for the plight of the rural economy. One day, they will deeply regret that. In the mean time, farmers the length and breadth of the country are furious and fuming.
	The Minister may blame his advisers and his civil servants all he likes, but, in the final analysis, this mess is of the Government's own making. Having cleared that up—as we hope he will very soon—as an honourable man, he should, as my noble friend Lord King said, seriously consider his future in that department.

Lord Plumb: My Lords, first, I regret that I was not here on Monday to hear the repeat of the Statement made by the Secretary of State in the other House. We have had a few days to reflect on that Statement and to express our concern about the further delay that we now anticipate. I am very pleased to be able to support my noble friend Lord King for introducing this debate about the RPA and the single payment scheme. My noble friend is a man of great political and ministerial experience. He speaks with some feeling, not just about the affairs of the countryside, but as a great politician.
	I declare an interest as a farmer and a hopeful—still hopeful—recipient of the payment under the agreed cross-compliance rules. I must tell the Minister that this is the biggest shambles and piece of incompetence that I have witnessed during my life as a farmer and my time involved in agricultural policy during the past 60 years. I could cite problems from the past, but never have I experienced the situation that we face at present. It has been clear for some time that the scheme created—I repeat, created—by the policy makers in Defra from what I believe was a very simple CAP reform when it was first issued was far too radical and complicated. It was too ambitious to expect the SPS to be implemented in 2005. The sad lack of pragmatism and efficiency has been obvious in the way in which the RPA has chosen to administer the scheme. As with many Defra projects, the IT, mapping, and so on and so forth, on which the scheme is built has turned out to be a complete shambles, in my opinion.
	I confess that I have some sympathy with some of the people who have been working during the past two years in the RPA, who themselves were totally confused and unable to cope with the very complicated procedures. I have some sympathy, too, with the Minister, who takes on a mantle that appears, at present, to be very hot indeed.
	I tabled a Written Question about a year ago asking what training people had to help by telephone those who wanted information on the operation of the scheme. I was told in a Written Answer that there was full, intensive six-week training and that there would be further training on dealing with telephone calls, perhaps from irate farmers. Therefore, when my son had a query, I asked him to phone the helpline. After three hours, and a lot of words, he asked: "What training do you have for this job?" The girl at the other end said: "We do not have any training. We are just given the book and told to get on with it". I only cite what my son said, who was trying to get an answer to a particular problem. Incidentally, he phoned the NFU helpline and told me that he had a very good and responsible reply.
	So when we hear of the numerous examples of correspondence that is flowing—very slowly—between the RPA and farmers, as the RPA tries to account for, say, 0.01 of a hectare, we must ask: where has the common sense gone? The Rural Land Register, which acts as a linchpin for the whole of the SPS, has been another farce in its failings and another cause of frustration to many farmers up and down the land.
	Why it is so difficult to map land with modern technology, of which the noble Earl, Lord Erroll, rightly reminded us? It is available and I can offer it to any local farmer who is looking for it. Why have the processes being slowed down? That is, perhaps, due to an overzealous desire for unreasonable accuracy. How can so many errors be made? Fields go missing on maps, as my noble friend Lord Dixon-Smith just told us. Whole maps go missing. There are repeated requests for land information that has already been given. I could continue by talking about various cases for the rest of the day. If the Minister doubts my word, I invite him to join me on Sunday morning and meet my neighbours—he does not live too far away—and he would hear about the rest. The list of errors is endless.
	It is estimated that the appalling delay in payments under the SPS has already cost farmers something like £32 million in England. Farmers are therefore justified in feeling betrayed by Defra, and I think they have been a lot more tolerant about a lot of this form-filling, map-checking and tree-counting than they might otherwise have been. They willingly entered into an agreement with the Government to manage the countryside to the best of their ability in a sustainable manner, in return for which they expected and believed they would get a fair price for the work to be done in an environmentally friendly way. They have begun to comply with their part of the bargain, but Defra has failed miserably.
	Supply traders are suffering as much as farmers. As we have just heard from my noble friend Lord Arran, the supply trade is, if anything, being penalised even more. Farmers will not—indeed, cannot—buy or pay for the fertilisers, seed and replacement equipment they need. The only suppliers that might be perceived to benefit are the bankers, as farmers go further into debt. I note that the Minister is likely to see the bankers shortly. That is fine, if we can have lower cost credit. The bankers will lend the farmers money, but the debts are still accruing and in an already shrinking business. There seems to be little concern for food security in this country.
	I am a born optimist, and yesterday I heard a lot of young farmers speaking at a conference with a lot of enthusiasm. But many of them are going abroad. I could name 90 young farmers who have recently gone to France to buy land because they feel that there are opportunities to start there. That is sad. Eastern Europe is making offers, and so are countries elsewhere. The key problem is the definition of the policy. We now know that Scotland and Wales have benefited very clearly from applying the historically based system, which seems to be working better for them. We would not be in this mess had we had a timetable for planning. As my noble friend Lord Dixon-Smith said, we would not be here—we do not want to be here—discussing this issue as we are having to do at the moment.
	I know of no other country in Europe where payments have been delayed as they are here. One of the young farmers told me yesterday that, for 130,000 farmers in Ireland, 90 per cent of the payment was made on 1 December. I therefore wonder whether the Minister agrees that we need a comprehensive review of Defra's entire role for the good of the whole economy, not simply for the good of Defra itself. Surely such a review must involve the whole of industry and the environment agencies. That, of course, should be led by a totally independent chairman. Even when the 2005 SPS farce is over, the farming industry must look forward to the same RPA being responsible for inspecting and enforcing much of the cross-compliance regime. Given current experience, the pragmatic and practical approach needed for inspection is sadly still missing. If the taxpayer, Defra and the farmers are to get the most from a single payment scheme, the scheme must be simplified, and the subsidies on the end product must subsequently be removed or replaced.

Lord Willoughby de Broke: My Lords, I, too, am most grateful to noble Lord, Lord King of Bridgwater, for introducing this debate at this key moment. I declare an interest as one of the 80 or 90 per cent of farmers who have yet to receive their single farm payments or their digital maps. I was very interested to hear about the difficulties experienced by the noble Lord, Lord Grantchester, and the noble Earl, Lord Erroll, in getting their farm holdings registered. I have had exactly the same experience, as has the noble Lord, Lord Dixon-Smith, so I can assume that this is a common thread running through the whole problem.
	Few of us are as surprised as Defra Ministers appear to be by the mess in which we find ourselves. It looked like an administrative nightmare from day one. The sheer volume and complexity of paperwork was always likely to end in tears. A new system, new rules, new mapping requirements, inadequate IT systems, new guidance and, as my noble friend Lord Plumb said, inadequate staff training were always a recipe for disaster, and so it has proved. It is not as though the Ministers were not warned by the NFU and industry that this would happen and that they were making a rod for their own backs by trying to put this new system in place without any sort of trial run. I do not know why the Government chose to do this instead of keeping the old IACS for a year, which I gather they are entitled to do under the CAP regulations. That system worked perfectly well, and I do not know why they did not keep it while they bedded down the IT systems, trained the staff and got the digital maps organised ready for a launch this year rather than in 2005. That would have been the sensible and practical thing to do.
	I am sorry to say that the Government ignored the warnings they were given. The Minister might be regretting the dismissive remarks he made in his Answer to a Starred Question asked by my noble friend Lady Byford on 24 January in this Chamber, when he rubbished the conclusions of the report of the House of Commons EFRA Select Committee. But the EFRA committee is absolutely right, and the Minister is absolutely wrong. Its criticisms have been proved right time and time again. I hope that the Minister will at least have the grace to apologise to Members of the House for misleading them on that occasion about the date of the final payments. I also hope he will come up with something a little more positive and will reassure farmers about the future, which is what we are looking for, rather than making too many recriminations. I am sorry that the Minister thinks that is a joke. It is what I feel; we should try to be positive about this.
	The most pressing reassurance we need, which nearly every speaker has mentioned so far, is whether it is possible to give some firm commitment to the date of payments. That is what farmers throughout the country are looking for. Will those payments be made within the June window, and what are the consequences if they are not? The consequences for farmers are of course serious, but what about the consequences for Government if they are not made within the allowed EU CAP process? As other noble Lords have asked—I know that this has been asked in the House of Commons—will the Government take responsibility for overdraft interest incurred by farmers beyond the end of March? I quite accept that the payment window was to the end of March; it moved from February to March. But farmers were expecting to be able to pay their bills by the end of March; indeed, they must have told their banks and their suppliers this. They were not expecting to incur further large overdraft interest costs. The Government repeatedly told farmers that they would receive their payments by the end of March. It is entirely the fault of Defra, not the farmers, and I do not see why farmers should be expected to carry the can for Defra's incompetence and pay penalty interest charges. Will the Minister say something about that in his winding-up remarks?
	What comfort can the Minister give to farmers whose new single-farm payment application forms will come thumping through the letterbox any moment now? As the noble Earl, Lord Erroll, pointed out, it will be extremely difficult—impossible, in fact—for them to fill those in accurately because we do not have accurate digital maps.
	It is true—again, the noble Earl, Lord Erroll, is absolutely right—that the digital maps will trigger everything. At the moment, the current forms which are coming through have to be fully and accurately completed by 15 May. Is that still Defra's deadline for the completion of these forms? If so, will it consider moving the deadline? How will it advise farmers to fill in the new forms when they do not have accurate maps on which to base their areas? The question of mapping is central to the whole problem. I should like to know whether the date can be moved and how farmers are to fill in their new forms. It may be beyond the possibility or the remit of the Government to move the date. It may be that they are acting as an agency for the agricultural directorate in Brussels and that Defra is simply a creature of the Brussels directorate. We would be much better off running our own agriculture, as this shambles has shown.
	The noble Lord, Lord Plumb, said that we need a review, and I believe that the Secretary of State, Mrs Beckett, has said that she would be carrying out a long-term review of the Rural Payments Agency. Of course such a review is badly needed, but asking Mrs Beckett to carry out a review of the RPA is rather like asking King Herod to carry out a review of the future of male babies. It does not make sense at all. What we need now is not a long-term review but short-term action and reassurance. I hope we will get that when the Minister comes to wind up the debate.

Lord Livsey of Talgarth: My Lords, I am grateful to the noble Lord, Lord King of Bridgwater, for introducing the debate, which is of absolutely crucial importance. I declare an interest as a life-long agriculturalist and as an applied agricultural economist. Indeed, I am not happy to be here today because this evening I am supposed to be with Brechnock Young Farmers, of whom I am the immediate past president. I am designing with them a competition whereby they initiate and innovate new farm enterprises—for which they will have to keep records and produce cash flows—to win the competition under the expertise of two judges. I shall be giving a cup for that. I cannot get to the meeting because it is too far, but I can assure the Minister that I shall be there before the end.
	This is a massive crisis for English agriculture. As we have heard, £2.9 billion is owed in single farm payments and yet, as far as I can see, the payments are flowing only in hundreds of millions a week at the present time, and only £1.1 billion has been paid to date. I am sure the Minister will correct me if my figures are wrong. I know what the situation is in Wales but I am on a learning curve as regards England. I apologise for not being here on Monday when a Statement was made. This was because the chairman of the Select Committee on agriculture and the environment wanted me make a visit for a nuclear investigation study.
	We understand that 96 per cent of the payments may be made by 9 June, when the original target was the end of March. As we have heard in the debate, the legally binding EU deadline is 30 June. From previous Questions that have been tabled and discussed with the Minister, as far as I can establish there are about 120,000 applicants for single farm payments in England. This really is a huge crisis, and we have heard about the sacking of the chief executive of the RPA.
	In my view, from my long experience, I believe that when you put IT into agricultural systems, unless you have exact parameters and people who have genuine knowledge of operating the system, it usually ends up with a shambles. The Government have introduced a very complicated system, which appears to be an IT nightmare. As we know, mapping is a major problem, and has been for some considerable time. It took some while to sort out the IACS mapping at the time it was introduced. The impact of all of this is a cash flow crisis for the farming industry as a whole, and an enormous one for individual farming businesses and farming families.
	In Wales, we had a payments crisis of much smaller proportions about five years ago. I can tell the Minister that civil servants worked weekends, cheques were signed and part payments made. Some of the deadlines were indeed missed, but at least the payments were sent out and the farming families received their money. The Welsh Assembly after that decided to take in-house responsibility for agriculture. Many of the responsibilities have been transferred to Wales from Defra, and we welcome that.
	But this situation has consequences in practical terms for individual farming businesses. This is springtime and, as we know, in cash flow terms, farmers have had to buy their seed, their fertiliser and many other commodities on which they will not see a return—certainly in arable farming—until the autumn. Indeed, that is a normal consequence. In livestock systems, it often takes 12 months for the money to turn over. These are facts within agriculture which no one can deny, given the biological sequences involved.
	The dynamic hybrid approach has been applied here when a simpler approach could have been instituted with a one-year delay, and, in my view, it is an enormous error of judgment that Defra did not take advantage of that. This is not being wise after the event. It must be terrible for Ministers to be lectured by people saying, "I told you so". We are not saying that in this debate. But certainly at the time when both Wales and Scotland chose the historical basis, we took into consideration that these were mainly livestock countries and 80 per cent less-favoured areas, and we had been right all along in choosing that system. In spite of criticisms which have come across this Chamber from time to time, we took the right decisions. Those of us engaged in agriculture and agricultural policy were horrified at the system that has been put in place in England.
	The problems have been graphically outlined in the debate. The result, of course, will be bankruptcies—there have been bankruptcies already—of farmers, suppliers and rural businesses as a whole. We must solve the problems as soon as we possibly can. Certainly if I was in the Minister's position, I would be trying to do something about making 50 per cent entitlement payments immediately to all who are qualified to receive them. This surely should be easy with a 90 per cent historical element in the payment and only 120,000 farmers involved at the other end of the payment. It should not be a big problem in my book.
	Single payments have, of course, been made in the rest of Europe. Let me give the Minister some figures. Certainly in Scotland and Wales, it is over 90 per cent; in Ireland it is 98 per cent, so it has improved on the figure given to us by the noble Lord, Lord Plumb; Austria, 100 per cent; Belgium, 100 per cent; Sweden, with a hybrid system, 90 per cent; Germany, with another hybrid system, 80 per cent; and Denmark, 98 per cent. Certainly we have not seen any riots from the farmers in France in recent days so things must be all right there, too.
	Who is to blame? Clearly, there is Accenture, the new computer company, and of course the RPA. Over Defra we should perhaps put a question mark. Is it actually Defra's fault when a stand-alone agency has been in charge? My colleague Roger Williams, who succeeded me in Brecon and Radnorshire, said yesterday in the other place that
	"The new firm was given the challenge of dealing with a new scheme. During our inquiry—
	that is, the agriculture Select Committee inquiry into the RPA—
	"the hon. Member for North-West Leicestershire . . . and I were told that DEFRA changed the details of the scheme 60 times between initiating the contract and finalising the scheme. At its heart, the problem lies with DEFRA as well as . . . Accenture and the RPA.".—[Official Report, Commons, 28/3/06; col. 298WH.]
	I am sure that is quite right.
	My noble friend Lady Miller asked what part the RPA ownership board has played over the past six months, chaired by a Defra civil servant. What was the executive review group doing concerning the RPA during the autumn, and what advice did it give the Minister? We are stuck with interest charges now—£25 million to date, so far as I can establish—because of the delays in the single farm payment.
	Finally, for the past 20 years we have not been in a resigning culture, and Ministers no longer resign. Politically, that is not on the radar screen these days. They do not resign over things for which they are responsible; that is a regrettable fact for both parties in government. No one in the Conservative government resigned over BSE, when in my view they should have done. I have a great deal of sympathy for the Minister, so I hope that he is listening. He has inherited the RPA problem, and I know that his predecessor was concerned about the application of the single farm payment system in England. Both Ministers were and are honourable men. I believe that they have been let down by the Rural Payments Agency. As the noble Lord, Lord King, said, the problem required hands-on expertise. In my view, Ministers should have put an agriculturally qualified trouble-shooter in to sort it out months or years ago.
	I am not asking the Minister to resign but if I, as a practical agriculturalist and an applied agricultural economist, had been in charge throughout the period since the system was initiated and seen the whole thing through, I really believe I would be resigning today. I know that farmers desperately need SFP cash now so I plead with the Minister to authorise interim payments now, which would save farm businesses and farming families. The supermarkets have had more than their pound of flesh from farmers through their ruthless cost-cutting. Will the Minister prevent his own RPA from finishing off the job, and the rest of the farming industry, though incompetence? Please, act now and save the day.

Baroness Byford: I thank my noble friend Lord King of Bridgwater for securing this short debate this afternoon. Like other noble Lords, I take no joy in our being back for the second day in your Lordships' House this week to debate the Rural Payments Agency. The Minister smiled when we said it, but it is meant genuinely. We would all much rather have seen a smooth transition from the old system to the new single payment system. All of us regret the circumstances that farmers find themselves in through no fault of their own. Frustration, anger, deep anxiety and stress are being borne by many—with, to date, inadequate answers to the questions that they raise.
	In his introduction, my noble friend Lord King asked where we are going, since many family farms are under severe stress. He raised the issue of tenant farmers, and their obvious regard to having to pay rents that are due within the next couple of days. The question of bank overdrafts was raised; I can tell the noble Lord, Lord Desai—to whose contributions I always listen with great care—that many of them are already up to their limit. That is the problem. On the key target that my noble friend mentioned concerning the Rural Payments Agency, it was said that 96 per cent of the bulk would be paid. Warnings were given when that dynamic hybrid model was chosen with a very tight delivery date.
	I should remind the House of our family's farming interest and of my involvement with several rural organisations such as the RSIN, the RABI, the NFU, the CLA, the Countryside Alliance and the National Trust—to name but a few. They are constantly fielding questions from distraught farmers. My noble friend Lord Inglewood is disappointed not to be taking part in the debate. Since he has such a direct interest, regardless of the intrinsic merits of the current system, he felt that it would not be right or appropriate for him to take part. I am glad—oh! The Minister says, "What about others?". If none of us was speaking, how would he know what was actually going on out there?

Baroness Byford: My Lords, that is for my noble friend Lord Inglewood, to decide. I cannot, as he is not here. The Minister will have to be patient and ask him himself. There were no speakers on the government Benches except for the noble Lord, Lord Desai, and the noble Lord, Lord Grantchester—whose contribution, raising his very relevant problems, was well worth having. If the Minister is saying that people speaking on behalf of other parts of the House—from the Cross Benches or Liberal Democrat Benches as well as the Conservative Benches—should not speak, my goodness, heaven help the farmers. The Minister has been ruffled before he came in, which is a shame as I hope that I will be helping him along his way.
	The noble Lord, Lord Livsey, referred to the figures achieved by other countries. I, too, would like to highlight three of them. If the Minister wishes to listen, he can. If not, it does not matter for I will continue anyway. The truth is that Sweden moved to a hybrid system and 90 per cent of its farmers were paid on 2 January, while Germany used a dynamic hybrid system and 80 per cent of its farmers had received theirs by December. In Denmark, where there is the other hybrid system, 98 per cent of farmers were paid to date. If those three countries can do it, it begs the question: why not this one? What have we set out to do that was not done in other countries? When the Minister comes to respond, perhaps he will tell us.
	Other noble Lords have highlighted specific areas. The noble Countess, Lady Mar, highlighted the management of this problem and the failure to resolve it. My noble friend Lord Plumb said, quite rightly, as others have done, that the frustration and delay involved in trying to contact the helpline—you would think that you would get an answer from a helpline—has been beyond belief. Common sense should have kicked in. Other noble Lords quite rightly highlighted the difficulty that the supply trade and other suppliers have. I support the call for an independent review.
	I understand that the noble Lord, Lord Bach, had a meeting with the industry yesterday in which they discussed where we are and where we are going, and I seek clarification on some issues. I shall not repeat what I said on Monday, but it still stands.
	I understand that numerous validation schemes had very small errors—indeed, some were tiny. It has been suggested that claims for less than two hectares or up to 3 per cent of the area, whichever is the lower, would be paid. Will the Minister confirm that? I understand that the agency will be paying the middle range of claimants. What does he define as the middle range?
	The centralisation of the mapping work has been returned to Reading. There is a move afoot for one person to be responsible for individual claims from farmers, which will ideally be linked up with a person at Reading. How will that be achieved? Many of these claims have been dealt with in other agency buildings around the country. Are the Government saying they will all be moved to Reading? How can there be mapping alongside one person at the same time and the same place?
	I understand that the contract work for the mapping will be recalled. Again, I would be grateful for clarification. I also understand that there may be a ban on RPA staff giving out their personal phone numbers to applicants so that they can get a quicker result to their inquiry.
	It is possible that some of the redundant quality checks will be set aside, which should free up extra staff. Can the Minister confirm that there will be a direct push on the conclusion of the mapping? How far has the agency got with its mapping exercise? How many of these outstanding claims—and our family farm is invalidated—are due to insufficient mapping detail? I would be grateful for clarification. I also understand that there is a problem with dual claims. Will he tell us more about that and how it can be overcome?
	It has been suggested by some noble Lords and by others outside that if this will take too long, historic payments which were originally due through the IACS claims should be paid first. On the whole they are already agreed, although under this new system there are still queries. It has also been suggested that the claims of people who were not entitled to payments before should wait until the others have been dealt with.
	One of the reasons for things going really wrong was, as noble Lords have suggested, that this country adopted a very complicated system. During a noble Lord's speech, the Minister indicated that our party agreed to this. I remind him, as I have done before, that Hansard shows that I warned at the time of the difficulty of choosing different systems, even within the UK. I said that in Wales, Scotland and Ireland—particularly Wales and Scotland—it would be different, which could have repercussions. I also raised the question of competitiveness with our EU colleagues. These things have not happened by mistake but because a conscious decision was taken.
	I hope that the Minister, having listened again to the many issues that have been raised, will deal with them constructively and answer some of these pressing questions. I have not attacked him; I said what I said on Monday. He is indicating that my noble friend Lord King did attack him, and I think he was quite right so to do. I have not attacked the Minister; I have given him some concrete suggestions, and what I seek from him, for the good of everybody, are some concrete answers.

Lord Bach: My Lords, I am grateful to the noble Baroness for that explanation, if that is what it was. I have congratulated the noble Lord, Lord King, on securing this debate. A number of very important points have been raised on this very topical and important issue. I will address them as best I can.
	The focus of the debate is the Rural Payments Agency. It was clear from many of the contributions today that a large number of concerns centred on one aspect of the agency's work; namely, the implementation of the single payment scheme. Perhaps I may take a few minutes to put the introduction of that scheme into context.
	In June 2003, the EU Council of Agriculture Ministers agreed what amounts, frankly, to the most important reform of agricultural policy in generations. Key to the reform was the introduction in 2005 of the single payment scheme, which gives farmers greater freedom to meet the demands of the market by decoupling subsidies from agricultural production, and helps reduce the negative impact of farming on the environment by removing artificial incentives to maintain production and introducing a new regime of cross-compliance. At last, we have started to get rid of the curse of constant subsidy. I cannot help but point out that none of this happened under the previous administration, who claimed to be so much on the side of the farmers. No reform was even attempted of the ridiculous system which had prevailed for much too long in these islands. It is not hard to guess why they did not seek reform in this area.
	After the disaster of foot and mouth, such reform of the CAP was a key recommendation of the Curry commission, and it lay at the heart of our strategy for sustainable farming and food. In truth, we are only at the start of this transformation, but we need to see it through if British farming is to have a future. The difficulties which we have encountered with this year's payments are, sadly, a distraction for many in the farming industry who would otherwise be focusing on modernising their businesses. That is important.
	The economic benefits to the UK farming industry of introducing the SPS are estimated to amount to some £100 million during the next few years as a result of improved market orientation and removal of many of the rules and distortions associated with production-linked subsidies. Importantly, the new scheme also simplifies the subsidy system by consolidating 11 previously separate CAP payment schemes into one, thereby contributing to a real reduction in paperwork for farmers once the system beds in.
	Many noble Lords compared the model of the SPS that Ministers have chosen to implement in England with that chosen in Wales and Scotland. They were right to say that we have adopted a different system in England, but I would describe it as being more sustainable and modern rather than more complex, as some others have described it. I agree with the spokesman for the Opposition in another place who said on Monday that the Secretary of State,
	"decided, rightly, to introduce a complicated hybrid scheme".—[Official Report, Commons, 27/3/06; col. 545.]
	Is that still the view of the Opposition three days later? If it is, it did not come out in any of the contributions from the Front Bench. I assume from this that the Opposition support our decision to introduce such a scheme, but I could be wrong about that. After all, this modernising move was long overdue after the minimal efforts they made to make the industry more sustainable during their 18 years in office.
	By contrast, Scotland and Wales have chosen to use a historic system to make payments. Under it, farmers continue, now and for the future, to be paid on the basis of what was received by someone farming the same land between 2000 and 2002. That appeared to us, and no doubt to the party opposite, to be neither beneficial in reconnecting farmers to the market, nor something with which taxpayers or farmers would be content for long. If we accept the principle that subsidies should not be linked to production—I hope that all parts of the House do—it is both unfair to farmers and unjustifiable to the general public to make future payments on the basis of crops and livestock that farmers had five years ago. There are indeed already rumblings in member states that have maintained the historic system about how unsatisfactory it is; and that dissatisfaction is bound to increase as time goes by.
	Comparisons about the timing of payments in other parts of the UK must also take into account the vastly differing number of claimants that each country has received: 120,000 in England compared with 22,000 in Scotland and 18,000 in Wales. I am surprised that there has been no mention of that point in the debate. Much has been said today about the payment timetable in England. The flat-rate model was chosen by Ministers only after a full consultation was carried out. It also followed advice received by Ministers at that time from the RPA that the introduction in 2005 of the SPS model chosen was achievable. At that time, stakeholder representatives and Ministers were greatly reassured. Indeed, as I understand it, it was the Opposition's belief that 2005 was the right date to start making the payments.
	It was always known that there might be a risk of European regulations changing—as indeed they did several times during 2004—to the extent that it might affect the payment timetable. As a result, the RPA announced in January 2005 that the most likely date for the first payments to be made would be February 2006. Payments under the single payment scheme indeed began—despite committees elsewhere saying it was unlikely to happen—on 20 February this year, and entitlement statements were sent out to all but 1 per cent of claimants soon afterwards to allow trading to begin.
	As I made clear to the House on Monday, and I want to reiterate it as clearly and firmly as I can, Ministers fully share farmers' concerns about the current problems and understand the distress many of them feel. After 20 February, Ministers had expected and been led to believe that more payments would have reached farmers by now than has been the case. It was only late in the afternoon of Tuesday 14 March that Ministers were first told by the RPA that the bulk of SPS payments would not be made by the end of March. We greatly regret that this situation arose.
	Several Members of the House have asked whether the Government would consider compensating farmers for late payments. As I tried to explain on Monday, payments, while later than any of us would like, remain well within the payment window specified in the relevant European regulations, which give us until the end of June 2006 to make these payments; hence the question of compensation does not arise. We are also acutely aware of the fact that, under the old CAP subsidy schemes, farmers would potentially have received payments at different times of the year, while the single payment scheme is just that—a single payment. Indeed, this is one of the main reasons why we made the announcement over 12 months ago, so that farmers would know that payments would not start until February.
	We know that the change in the timing of payments has caused difficulty to a number of farmers as they adjust to the new scheme, which is why I have been in regular contact with the leaders of the farming industry, their suppliers and their bankers. I have met all these groups in the past 24 hours, and I talked this morning to the Agricultural Industries Confederation to update its representatives and, more importantly, to hear their views on the current situation and their perspective on how matters are affecting their farmer customers.
	I have to say that, as far as one can be in this situation, I was encouraged by the message that I took from my meeting with the banks this morning, and indeed from discussions with the NFU, CLA and TFA yesterday morning. There have been no difficulties in securing loans up to the level of the expected payments and none of the unions involved, nor the banks, nor the AIC, knew of cases of bankruptcy that have followed from the fact that we are not going to meet the bulk of payments by the end of March. I do not say that there will not be any, but there are none now, and it is not right to scare on the basis that there have already been some. The issuing of entitlements statements, even where not fully validated, has helped in that respect. In the same vein—and I repeat this, because it is important—I was told unequivocally by the banks that no viable farming businesses are failing as a result of single payment issues.
	The situation we found ourselves in when the RPA reported its revised assessment of the situation on 14 March was simply unacceptable. That is why we supported the decision of the Permanent Secretary to replace the then chief executive of the RPA with Mark Addison, a senior civil servant with outstanding experience and abilities, and charged him to come forward urgently with a report on the steps needed to get us back on track. The RPA still faces a significant challenge in getting SPS payments out to farmers, and I know RPA staff are doing their best and working all hours that God sends. But speeding up these payments—consistent with our responsibilities in handling public funds—remains the overwhelming priority of Defra Ministers.
	Noble Lords have asked questions on the detail of the steps being taken to speed up payments. There have also been some questions on the detail of the RPA's administration of the scheme, particularly mapping and the IT system. On the question of mapping, since September 2004 there have been more than 100,000 requests for new land to be registered or for boundaries of registered land to be amended. In the past five months alone around 45,200 holdings have had fields mapped, and as at the week ending 24 March around 5,000 holdings were awaiting one or more fields to be mapped. The Rural Land Register now comprises some 2.1 million land parcels, and by area is estimated to be approximately 98 per cent complete for SPS purposes. The remaining 2 per cent of incomplete cases are generally where farmers have still to provide maps. Their land will be digitised but their payment may be delayed, because until it is digitised it is not valid for payment. The new acting chief executive realises that mapping is one of the considerable problems, as many noble Lords from all parts of the House have stressed today, and he is taking a close personal look to see what can be done to improve the mapping process. Any advice from noble Lords on that important issue would be very welcome.
	The development of the Rural Land Register is a significant achievement. It will be used widely within Defra not just for processing single payment scheme applications, but for other schemes such as environmental stewardship.
	On IT issues, the noble Countess, Lady Mar, asked a question on Monday about computer crashes and lost data. Expanding on the answer that I gave, I emphasise at this point that the RPA is satisfied with the performance of its SPS IT system. To progress payments, the RPA is utilizing the system for 15 hours per day during weekdays, and up to eight hours per day during weekends. However, it is sometimes necessary to temporarily stop the processing of individual claims so that the system can carry out certain automated system-wide tasks such as identifying which claims are now ready for payment or have completed certain validation procedures. As I said on Monday, all the main IT systems are in place and have produced the entitlement statements and first payments as planned. However, we also know that it has not been possible to ramp up the validation and distribution of payments as planned.
	The key objective for the acting chief executive is to identify the problems and develop and drive forward the plans to overcome them. He has identified several actions, some of which I outlined to the House on Monday, which would enable us to speed up payments without losing sight of the need to properly manage the disbursement of a large sum of public money.
	There is no question of the UK Government receiving interest on this money. It belongs to the EU, and is then transferred to us to hand on to farmers. There is no question of it being in UK Government bank accounts where interest can be gained. I hope that once and for all that canard can be put to rest.
	The acting chief executive has removed disproportionate checks from the payment authorisation system to speed up the payments; prioritised work on validation of claims to release the maximum value of payments as quickly as possible; centralised key mapping work; and strengthened the RPA's capacity in key areas. Those were initial steps. He is now, with the strong support of the Secretary of State, taking the following steps. He is reforming RPA processes to deliver customer focus by dedicating teams of staff to work on individual claims in the entirety, rather than the current task-based approach. Also as part of that change—and this is significant, as noble Lords with experience of this may appreciate—processing staff will be allowed to phone applicants directly to work through any outstanding issues. A discrepancy tolerance of two hectares or 3 per cent, whichever is the lower, will be implemented for validation of claims. That is also important. There has been too tight a process with regard to small pieces of land.
	Redundant quality checking processes will be stopped to allow staff to work on claims processing. People doing the mapping work will be joined up with those actually processing claims in the same office. Where mapping correspondence is outstanding—and we all know examples of that; we have heard about them today—payments will be made on the basis of the information the agency has. A senior manager will be appointed to take delivery of the 2006 claims processing, which we cannot forget.
	In his initial assessment of the reasons for delays, the acting chief executive has not identified lack of overall staff resources as a concern for the completion of the 2005 SPS statements. In addition to these steps I can also announce today, after receiving representations about the need to provide more time for farmers to notify transfers of entitlements in order for the transferee to claim on them under the 2006 scheme, that we are arranging for the necessary changes to be made to both EU and domestic legislation. In practice that means the deadline will be moved back from 2 April to 23 April, an extra three weeks. While that may not be the most major thing the House wanted to hear today, I hope it will be considered an important step.
	I shall quickly try and answer some questions. The position of the ex-chief executive is that he is on paid leave of absence until the department is in a position to determine and agree the terms of his departure. There is all-party support to introduce the new scheme in 2005 to help modernise the industry. We only went ahead with it after the RPA advised that the task was achievable. The noble Lord, Lord Plumb—whose contribution to these proceedings I always listen to with great care—will know, although this is not what he asked for, that there is to be a thorough examination of the RPA to see whether the agency is generally functioning in the way it should. That review is starting now.
	Like the noble Lord, Lord King of Bridgwater, when he was a distinguished Minister, I too am a hands-on Minister. I have, for good or bad, spent a long time over a number of months talking to the RPA and listening to what it has to tell me about what progress was—or was not—being made. I have to tell the House that it was not until Tuesday 14 March that we learned that the bulk of payments would not be made in time. This is from a standalone agency of the sort that was the model for the Conservative government from 1979 to 1997. What are Ministers supposed to do when they get advice of that kind? We checked, checked, and checked again. There has never been any complacency; there was continual challenge. Our priority was to see payments made. Until 14 March, the advice given in the face of continuing ministerial challenge was that the bulk of payments could—and would—be made on schedule. The RPA is an arm's-length delivery agency, and Ministers are reliant on the advice received from it. We understand our responsibilities. The government of which the noble Lord was a distinguished member was not noted for its resignations, the noble Lord, Lord Carrington, being a very honourable exception. Perhaps the noble Lord would name a Minister who resigned over the BSE farce?

Lord King of Bridgwater: My Lords, I start with an apology. Old habits die hard: I realise that I should not have spoken from this Despatch Box, but perhaps that is a matter for this side of the House and nobody else. I apologise for any embarrassment caused.
	I thank all the noble Lords who have taken part in this very serious and most unwelcome debate. The noble Lord, Lord Livsey, and my noble friend Baroness Byford both made the point that nobody wanted to be here; I certainly did not, but this issue cannot be ignored. There was no mention of the Rural Stress Information Network today but, as the Minister will know, it was mentioned in the debate yesterday. The right reverend Prelate the Bishop of Hereford chairs one branch for four counties. The network has seen a huge increase in the number of calls and, tragically, the suicide of somebody facing financial problems. None of us makes any apology for raising these issues.
	I am very grateful to the number of noble Lords who have spoken with great experience—and, indeed, personal experience—including the noble Earl, Lord Arran, who spoke of the problems in Exmoor, a place that I love and used partly to represent. The noble Lord, Lord Grantchester, spoke with great authority on the dairy industry in particular, as well as other aspects of agriculture and the problems that people are facing. He brought up the issue of mapping, as did the noble Earl, Lord Erroll, and the noble Lords, Lord Dixon-Smith and Lord Willoughby. Clearly the mapping issues that have arisen are a real impediment, as I understand it—although I am unfamiliar with some of them—to the Minister being able to resolve the current crisis quickly.
	I would like to query one point made in the Minister's speech. This is where the noble Lord, Lord Desai, with his economic background, may be able to help. I have never heard of £1.5 billion being transferred from one organisation to another without anybody making any attempt to earn interest on it. It may be my economic illiteracy, but this must, presumably, reduce the Government's borrowing requirement; it must make some contribution to the economic world. The noble Lord, Lord Desai, is much better qualified to tell me whether I am right.

Baroness Bonham-Carter of Yarnbury: My Lords, I, too, thank the Minister for bringing forward the order. The British film industry has a lot to be proud of, as a major part of our creative economy and a valuable means of representing Britain to the world. The people who work in it are a great national asset. Here I declare an interest, because my cousin is Helena Bonham-Carter, whom I believe to be one of those great national assets, as is the noble Lord, Lord Puttnam—at least, before he went into politics.
	The British film industry is one to support. We welcome the announcement of a new tax credit system and the fact that it is designed to help smaller-budget films. Certification as a British film is the main gateway to that tax relief. Like the noble Lord, we welcome the introduction of a cultural test designed to ensure that certified films have greater cultural value for Britain and that any investment develops a broad range of skills in the domestic industry.
	However, I have a couple of queries. There is concern that the practitioner section of the test potentially overemphasises the importance of key personnel. Only two points are awarded for the majority of cast and crew, compared with 11 for directors, producers, lead actors and department heads. That seems slightly at odds with the stated goal of,
	"maintaining a critical mass of UK infrastructure, creative and technical expertise".
	We welcome the fact that the Chancellor last week reduced the percentage that a film would be required to spend in the UK to qualify for tax relief, from the previously proposed 40 per cent to 25 per cent. However, we think that the narrow definition of UK expenditure—namely, that it applies only to money spent within the UK rather than on UK elements abroad—has potentially negative consequences for co-production deals. Co-production deals are more often than not vital to secure sufficient capital for lower-budget and independent British films. This often means that British talent, making what are clearly British films, shoot them abroad. The present definition of UK expenditure will make it hard for such films to achieve the requisite UK spend for tax relief. Also, I believe that tax relief will not be permitted on the wages of British cast and crew shooting abroad. That seems to conflict with the stated aim of the DCMS for the cultural test, which is:
	"The flexibility of the new system will allow producers to clock up points if they use UK content, facilities and personnel, but is not intended to penalise them if they look to source some of their film making outside of the UK".
	It seems that a film could pass the cultural test for classification as a British film but not have any expenditure that qualifies as UK expenditure under this definition. The Government's goal of a sustainable film production sector is laudable. We worry that this one definition has the potential to undermine its good work. With those questions, these Benches are happy to support the order.

Lord Davies of Oldham: My Lords, the Office of Rail Regulation will take over from the Health and Safety Commission and the Health and Safety Executive as the health and safety regulator and enforcement body in relation to railways on 1 April. These regulations will permit the ORR to cover its costs for these activities by means of a levy on the rail industry. The ORR's health and safety responsibility will cover all forms of rail transport, so the regulations apply to London Underground, heritage railways and tramways, as well as the national rail network.
	The origins of the levy go back to the Railways and Transport Safety Act 2003. Section 105 of that Act amended the Health and Safety at Work etc. Act 1974 to enable regulations to be made whereby the HSC and HSE would be able to raise a levy to cover all or part of their railway-related work. It included a provision that the first regulations,
	"shall not be made unless a draft has been laid before and approved by resolution of each House of Parliament".
	Today's regulations are the first to be made since the passage of the 2003 Act and that is why both Houses need to approve them.
	The principle that the costs of regulation are met by the industry being regulated is well and widely established. The mechanisms for apportioning those costs, however, present somewhat more of a challenge. The objective is to develop something which is fair and transparent and which broadly reflects where costs fall.
	The regulations place an obligation on providers of railway services to pay a levy to the ORR for the purpose of meeting the cost of the ORR's policy-making and enforcement activities in relation to railway health and safety. The regulations enable the ORR to determine certain matters in relation to the levy, such as the total amount to be imposed and the criteria for assessing the proportion of the levy to be paid by a particular railway service provider. The ORR can request information on turnover from railway service providers. The ORR is allowed under the regulations to make assumptions where a railway service provider fails to supply the requested information.
	The regulations have been subject to extensive consultation. The principle of the levy was generally accepted. Concerns were raised about the impact on smaller companies. I know that my noble friend Lord Faulkner has a great interest in heritage railways, and I have no doubt that he will make that point in this short debate. I shall not go into greater detail on these matters. Suffice it to say that we consulted widely before we produced the regulations. Accordingly, I commend them to the House. I beg to move.
	Moved, That the draft regulations laid before the House on 16 February be approved [19th Report from the Joint Committee].—(Lord Davies of Oldham.)

Lord Addington: My Lords, I could not speak earlier, so perhaps I will be allowed to join in the debate now. We have no fundamental objection to the order, the general thrust of which we support. Probably the most interesting part of the debate relates to heritage railways, and it might be appropriate that I missed my turn to speak on this occasion, as the noble Lord is justifiably regarded as an expert. Many of us will be happy if we can be assured that heritage railways, which are a very important cultural asset, will be protected and that the Government will ensure that they are guarded in the future. For children of all ages, the heritage railways are a wonderful asset and a wonderful part of our living history. It does, however, detract a little from the romance of the age of steam when one realises how much more polluting those things are when they go past. The good and the bad of the past are preserved in this cultural asset, and I hope that the Minister will be able to assure us that it will be guarded.

Lord Hunt of Chesterton: My Lords, I would like the Minister to clarify a couple of points. One is that health and safety are connected to the environment, but they are also connected to security. We had the events of last July in London, and there has been considerable discussion about how the Tube should operate in future and what steps should be taken to address safety and heating, which is an acute problem on the Tube. Will all this come under the order? How will it be sorted? There is, of course, an increasing problem with noise as trains go faster; we have come a long way from the old problems caused by steam to the environment. The effects of noise caused by very fast trains in certain areas are not well understood. There is the way in which noise moves. The noise is acute, for example, in some valleys but not in others. This is an under-regarded area of responsibility.
	Finally, I wonder whether the Minister can comment on how any taxation on railways as a result of the order will compare with that on aircraft. In debates in this House, noble Lords have commented that it is so much cheaper to fly to Paris than to go there by train because railways are bearing a tax that aircraft are not. I hope that the regulation will not make railways suffer further from higher tax than the egregiously low taxes on aircraft.

Lord Davies of Oldham: My Lords, I am grateful to noble Lords who have contributed to this short debate. I am not sure whether my noble friend Lord Hunt of Chesterton quite welcomes the order, but I think that noble Lords on both Opposition Front Benches broadly welcome the proposals. I shall deal first with the questions that have been asked. I assure my noble friend Lord Faulkner of Worcester that the turnover described in the regulations relates to the operation of a railway, not to extraneous costs. Income from refreshments sold on a heritage railway would not be part of the turnover; only the actual operation of the railway would be. Nor would the construction of new lines, for example, be brought within this framework. So the concept of turnover relates to the operation of the railway.
	I was also asked whether people who think they have been badly treated could appeal. It would, of course, be open to any regulated company to seek judicial review of a decision if it considered the Office of Rail Regulation to have acted unreasonably. I should add that the Office of Rail Regulation is subject to scrutiny by the National Audit Office and the Public Accounts Committee. So any unfair and arbitrary action by the ORR would be aired fairly promptly. The offended party would make sure that it was in the public arena very rapidly and, of course, would be subject to parliamentary interest from that point. But, of course, in such a situation, judicial review is always the last stop.
	The noble Lord, Lord Hanningfield, also pointed out that there are a number of heritage railways with turnovers above £1 million. These are subject, in the first range, to a levy of only £1,000. I hear what the noble Lord says—that heritage railways are usually sustained through voluntary efforts and costs have to be kept to the lowest level possible—but he will recognise that a levy of £1,000 on a turnover of more than £1 million is a modest amount.
	The noble Lord asked how long these figures would remain in place and whether they would be inflation-linked, which is also the burden of the remarks of my noble friend Lord Faulkner. This is a matter for the Office of Rail Regulation to consider; the limits are not prescribed in the regulations. We would not expect something which is, by definition, bound to be open to change to be specified in the regulations. The figures can be reviewed by the Office of Rail Regulation each year when it makes its annual determination. It is committed to a full review of the levy regime in the light of experience, and it expects to begin work on this at the end of 2007. Whether the £1 million and £5 million limits need to be varied will form part of that review. I have no doubt that if it proved to be the case that these figures grievously affected the operation of the small number of heritage railways which come within the framework, the Office of Rail Regulation would take that matter on board, and would expect to do so within two or three years of the order becoming part of the statute.
	I should emphasise to my noble friend Lord Hunt that, like heritage railways and tramways, the Tube is certainly part of this regulation. Inevitably, health and safety regulations on Tube lines have somewhat different expectations, for all the reasons that we can well imagine, and it is because of this that the system has a somewhat different emphasis from the more obvious overground lines. Nevertheless, we have sought to promote regulations that govern the whole sector, as we are obliged to do.
	I hear what my noble friend says about noise. I think the whole country is aware of the fact that, among all the environmental aspects of health that we have to consider, noise is an increasing factor. That is why it is so prominent in regard to road transport and air transport, which the noble Lord, Lord Hanningfield, and myself have enjoyed debating over these past few—I was going to say "interminable months"—lively weeks. Health and safety regulations for rail are different from the ones for air for very obvious reasons. They are entirely different regimes.
	Is the railway being adversely affected by these regulations? I do not think so. The railway prides itself—rightly—on its extraordinary success in terms of accident rates. Whenever a disaster occurs on the railway, we all know of the shock to the national psyche that occurs. He will recognise that rail remains the safest form of land transport. The reason air can compare with it at all is simply that air transport covers many thousands of miles with its passengers. In many cases, it will be many thousands of miles before any dramatic acts of taking off or landing take place with the aircraft, whereas rail passengers are, by definition, always in contact with the track and there is always potential danger.
	Rail is not being disadvantaged by this. It is being guaranteed that in moving these powers away from the Health and Safety Executive and directly to the Office of the Rail Regulator, it is having its health and safety regulation—on whose high standards it has always prided itself—directly related to a body dealing uniquely with rail. It can therefore take account of rail's interests, as my noble friend was enjoining us to do.
	I re-emphasise, in my final brief remarks, that these regulations have been tabled against a background of widespread consultation and general approval. The heritage industry has indeed presented its case with force, as my noble friend Lord Faulkner knows only too well. Indeed, all aspects of rail have had the chance to comment on these proposals and the regulations command the widespread support of the industry.

Lord De Mauley: My Lords, I thank the Minister for explaining the regulations so clearly. We agree that unfair discrimination based on age is clearly unacceptable and the vast majority of employers recognise that the only acceptable basis for discrimination is ability. It is important that people should be encouraged to work until a later age than has been the case hitherto.
	Making the most of employees and attracting new workers is vital to the competitiveness of United Kingdom firms. Our businesses already well recognise that the challenge of an ageing population means that employment of the over-50s will become ever more important to them and they are addressing this regardless of coercion. Government and businesses have an equal imperative to find ways of increasing participation among this group. Experience tends to show that people in work also remain healthier longer, which is good for the individual and good for the National Health Service.
	However, it is necessary to strike a balance between, on the one hand, the fact that people should be able to work for as long as they are willing and able and, on the other, that a clear retirement age is important to companies in planning their businesses and ensuring that firms can retire employees with dignity, rather than their being forced to dismiss staff on grounds of competence. The new right for employees to request postponement of retirement will give staff the opportunity to discuss working longer.
	I hope that the Minister will forgive me if I ask some questions that he may already have answered—the regulations are quite complicated. Will he confirm that the right-to-request procedure will nevertheless allow employers the final say over the retirement date to avoid a huge increase in employment tribunal claims? Can the obligation to discuss be complied with without employers being forced to hold innumerable and repeated discussions with any individual employee who cares to raise the issue? A common-sense approach is necessary. Will the Minister confirm that the new regulations will not be seen by aggrieved employees of whatever age as a carte blanche to take their employer to tribunal? Employers must feel confident that they can defend perfectly justifiable age-related employment practices where they benefit both employer and employee. The Government must recognise that the new law will take time to bed down as employers become used to the new requirements. We note that no transitional arrangements seem to exist in the draft regulations. Does the Minister have any comment on that observation?
	Just as it is right to ensure that older workers receive higher levels of redundancy pay, companies should be allowed to reward the loyalty of their longer-serving employees with incentives such as more holidays and better sick pay. Other practices, such as health checks for older workers or IT training for over-50s, are also highly valued and should not be scrapped as a result of the regulations. I think that the Minister has assured the House that those practices will not become outlawed by the regulations, but will he confirm that?
	Will he further assure the House that the regulations will not prevent employers, first, paying a youth rate to inexperienced employees under 21, which might otherwise discourage employers from offering them employment at all; and, secondly, providing length of service related benefits? Concern has also been raised that the regulations will equalise statutory redundancy pay across age groups, where the existing framework recognises that older workers are less likely to be re-employed. Will the Minister assure the House that those fears are groundless?
	The Minister is also aware that partnerships have two fundamental concerns in relation to the regulations. First, regulation 7 provides a default retirement age for employees at 65. That default is not extended to partnerships and it is therefore necessary for partnerships to provide objective justification for a retirement age at any given age that may be specified and agreed on by the partners. The absence of any guidance as to what a partnership is required to do to provide objective justification for retirement at a given age—particularly bearing in mind that it was observed several times by the Minister in the other place on Monday that such a threshold is going to be "a stiff test" to satisfy—is of great concern, as it creates significant business uncertainty as to how this test can be accomplished and demonstrably shown to have been satisfied.
	Secondly, although it is permitted by regulations 32(l) and 32(2) to attach length of service benefits to benefits that employees and partners may enjoy while they are within employment or continue to be within a partnership, regulation 32(7) does not sanction any length of service benefits which, although arising through length of service, are awarded if they arise by virtue of the employee or partner ceasing to work. In other words, if length of service benefits arise after employment, objective justification still has to be provided. That requirement creates significant business uncertainty to employees and partnerships alike. For example, in the partnership context, it will be unclear whether post-retirement benefits which attach to length of service, commonly available to partners after their departure from a partnership, can be regarded as lawful.
	It thus emerges that in both these areas of concern it is necessary for partnerships to provide objective justification for arrangements which have nonetheless been agreed on by partners through internal consultation and voting. Partners frequently play a key role, both as proprietors and managers of the business in which they work, and in making the decisions which create their governing rules. We thus contend that such consultation and voting should be given full and proper regard so as to demonstrate objective justification.
	Accordingly, it would be of great assistance if the Minister could confirm that Her Majesty's Government recognise the different status of members of partnerships from employees, and in consequence undertake to ensure that guidance is published well before 1 October but after further consultation with those representing professional partnerships to ensure that employment tribunals take account of the very different nature of the partnership relationship and give proper weight to the rules and means by which partnerships determine these arrangements and thus allow partnerships to be able to satisfy themselves that the requisite level of objective justification has been achieved. Without such guidance we believe that partnerships will face a significant degree of uncertainty in their business planning which will both affect their ability to bring in new partners as well as risk undermining their vital contribution to the UK economy.
	We support an end to age discrimination but the above concerns are important. I look forward to the Minister's responses.

Baroness Sharp of Guildford: My Lords, I too, from these Benches, thank the Minister for explaining the regulations to us and make it clear that we abhor age discrimination, whether against young or old. I also declare an interest as the chair of Age Concern Surrey.
	We on these Benches have long advocated what we call the flexible age of retirement, leaving it to the individual to decide whether he or she feels that it is appropriate to retire. We have also long recognised that, in so far as one puts forward such a proposal, it is necessary to balance the interests of employer and employee, and in drawing up these regulations it seems that this process of balancing has been done and, through a process of consultation, the interests of the two sides have been brought together in, in most cases, a reasonably amicable agreement on the way forward.
	In particular, we welcome the notion of the default age of retirement, although in some cases it has a bias a little bit in favour of the employer and against the employee. For example, people over 65 will no longer have any statutory right to remain in the job if the employer really wants them to go.
	We have two questions for the Minister. First, it was clear from the discussion in the other place—and the Minister repeated it—that universities cannot refuse an applicant who has the appropriate qualifications on the basis of age. At present, many government grants for such courses are not normally given over the age of 55. What is the proposition in relation to government grants? Do the Government seek to argue that that discrimination is objectively justified, or will all grants be available on a non-age-discrimination basis?
	My second question mirrors that put from the Opposition Benches, and relates to Regulation 32(7), which states that benefit does not include benefits awarded to a worker,
	"by virtue of his ceasing to work for",
	the employer or partnership. Thus, length-of-service benefits given on retirement are excluded from exemptions; they will need to be objectively justified. Why have the Government done this?
	My impression is that the latest draft contains an additional provision that was not consulted on, and it is not clear on what basis Regulation 32(7) was added. Was it in response to comments made during the consultation? If so, what were these comments? It is difficult to understand why the exemptions should not also apply to benefits accumulated through the length of service but awarded on retirement. If an employer wants to reward loyalty during employment, surely he might want to encourage employees to stay until retirement so that they might get, for example, post-retirement medical benefits or life assurance or, in the case of partnerships, post-retirement packages.
	I have three questions. Given that the Government accept that length-of-service benefits generally should be granted an exemption from the normally high test of objective justification, why have they decided in this latest draft to exclude all length-of-service benefits based on retirement other than enhanced redundancy payments and pensions? Was that in response to the consultation? Do the Government want employers to have the additional cost and red tape of proving objective justification in such circumstances? Do they recognise the likely consequences are to discourage employers and partnerships from continuing with these types of benefit to people after they retire? Is that really what they intend?
	Again, I thank the Minister for explaining the regulations. By and large, we on these Benches support them.

Lord McKenzie of Luton: My Lords, I start by thanking all noble Lords who have contributed to this discussion. I think there has been broad support for the thrust of these regulations, which is very welcome. I will seek to deal with each of the points that have been raised. I thank some noble Lords for the advance notice of the questions and points that were raised. That makes it easier.
	The noble Lord, Lord De Mauley asked whether the final decision on retirement remained with the employer, and the answer is yes, provided that the six-month notice procedure is followed. So long as it is, the default arrangement is sufficient.
	There was the issue of whether there need be lots of discussion with individual employees, or whether the employer can reach agreement with employees' representatives to put in place a policy for the business. Clearly, if an employer wishes to have a mandatory retirement age below 65, they will need to able to objectively justify it otherwise it will be unlawfully discriminatory. An employer whose discussion agreed a retirement age or other policy with employees' representatives is likely to be in a stronger position in demonstrating that it is justified than one that unilaterally imposed it as a policy, but that is not the whole answer. Individual situations will need to be looked at in their particular circumstances.
	As to whether the regulations will become a carte blanche for employees to take employers to tribunals, in the light of responses to our consultation on the draft regulations we have tightened up the provisions relating to the new duty to consider procedure and to unfair dismissal. I am grateful again to noble Lords for recognising that it was a very full and effective consultation process. It was clear from the consultation that the regulations provided too much uncertainty and would result in unnecessary tribunal cases. We feel that we have remedied that and provided some certainty.
	The noble Lord, Lord De Mauley, asked about transitional arrangements, which did not seem to be included. Schedules 7 and 8 contain all the necessary transitional arrangements. They mainly relate to retirement, and deal with the fact that employers will not be in a position to give six months' notice for dismissals taking place prior to April 2007. The transitional provisions ensure that employers will not have to do anything new before the regulations come into force on 1 October this year. They are based on the requirement to give proper contractual or statutory notice of termination.
	With regard to whether it is possible to continue with arrangements that employees may have regarding high levels of redundancy pay incentives, such as extra holiday, or whether they might be outlawed, the legislation—which includes exemptions for paid and non-paid benefits—will not outlaw benefits based on length of service. We recognise that such benefits are widely supported and play a positive role in rewarding loyalty, providing incentives and helping motivation. The regulations are framed in such a way that employers are not required to justify every benefit on an individual basis.
	Perhaps I might take up the point probed by the noble Baroness, Lady Sharp, and the noble Lord, Lord De Mauley, about post-retirement benefits. We see a distinction between exemptions provided for in-service benefits, which reward loyalty and efficiency, and post-retirement benefits. It does not mean that post-retirement benefits are outlawed, but that they are subject to justification under the regulations. Will the regulations prevent employers paying a youth rate to inexperienced employees under 21? No: the exemption in Regulation 31 is deliberately designed to protect employers against challenge where they are using youth rates of the national minimum wage. They cannot discriminate within those bands, and it depends on whether the rates being paid are above the adult rate. Different considerations could apply then, but the broad answer is no. There was also concern that the regulations would equalise statutory redundancy pay across age groups; I think I dealt with that in the presentation. The matter was certainly considered. We believe keeping the bands, but raising both ends, to be consistent with the directive, which is why we proceeded down that path.
	The noble Lords, Lord De Mauley and Lord Freeman, raised the issue of partnerships. I understand the points that have been pressed, and the very different nature of partnership arrangements from normal employer-employee relationships. The default retirement age cannot extend to partners. Similar considerations apply, for example, to office holders, whose retirement will have to be objectively justified if necessary. We have no plans to issue specific guidance on the nature of partnerships to employment tribunals. We believe that tribunals are experienced in dealing with a wide range of difficult and complex situations. It is wrong to suggest that they would not be able to understand the evidence put to them by partnerships, or apply the law to them. They are perfectly capable of deciding whether a particular age-based practice is objectively justified. Clearly, the existence of an agreement about retirement between partners, properly considered and based on sound business reasons, could help support the partnership's case on objective justifications, since partners would have been party to discussions and would have agreed to the need for an appropriate compulsory retirement age.
	An explanation of the test of objective justification will be included in the ACAS good practice guide. I hope that will help. It will be a general example on which organisations will be able to base their own particular objective justifications, although tribunals will not be obliged to take this into account. Partners should be able to challenge their retirement if they feel that they have been discriminated against because of their age, especially if they feel that they are still bringing value to the firm. I was interested to hear the noble Lord, Lord Freeman, say that partnerships are specifically exempt under this legislation in the US. There was some interesting press comment about the number of US law firms in the UK who apparently do not have any retirement age as part of their arrangements.
	I touched on exemption for service-related benefits earlier. These should be available for in-service benefits. They are widely accepted as playing an important role in rewarding loyalty, recognising experience and encouraging motivation. Payments on retirement are not covered but, as I said earlier, that does not mean that they are outlawed; it depends on their being objectively justified. The noble Baroness, Lady Sharp, raised issues of funding, particularly for universities, indicating that it is difficult to get government grants beyond the age of 55. These regulations cover employment and access to vocational training; funding for training falls outside the scope of the directive and is therefore not affected by it. I think I dealt with the other points raised about in-service benefits.
	I hope I have been able to cover each of the points raised by noble Lords; I thank them again for their support. This is a very important step forward, which will have wide-ranging benefits for individuals and business. I commend the regulations to the House.

Lord Giddens: My Lords, it gives me great pleasure to congratulate the noble Lord, Lord Rees of Ludlow, on his absolutely outstanding maiden speech. The noble Lord and I go back quite a long way, to a time when we were both fellows at King's College Cambridge—I still am a fellow at King's College. The noble Lord, Lord Rees, is the author—believe it or not—of more than 500 scientific papers. How does one person manage to do that? He is the president of the Royal Society and master of Trinity College. How elevated can you get? He will be a major addition to your Lordships' House and I am very pleased to welcome him here.
	Let me begin by thanking my noble friend Lord Williams of Elvel for initiating this debate. I must say that during my brief time in this House, he has been an important figure in pushing universities to the forefront. At one point, I was director of the London School of Economics. I used to say to the graduating students, "The LSE stands for many things: Let's See Europe; Long Stay in England and"—my favourite—"Lots of Study Expected". In the Tube on the way here, I had a bit of fun playing around with RAE, which yields the following pearls: "Ridiculous Asinine Endeavour"; "Really Absurd Experiment"; and "Rewards Assiduous Eggheads". The Minister is a very creative person, so I invite him to produce his own version in his summing-up speech.
	I prefer the third of those because, as other noble Lords have said, the RAE has, on balance, been very successful. Some of us here are, if I may put it this way, mature enough to remember a time when things were very different. I used to teach at a university in the centre of the UK—not too far from Leicester—that was said to be the site of Kingsley Amis's novel Lucky Jim, in which the main character spends a lot of his time throwing darts at a picture of his professor on the back of his door. Well, we did not do that, but we did the functional equivalent. How different things are now. The RAE is one of the main factors responsible for that difference.
	If we consider my ex-institution, the LSE, it put 97 per cent of its staff in for the most recent research exercise. Most of those whom we could not place were people that we could not place in the categories—not people who were not research-active—so the institution was almost 100 per cent research-active. We got that way without too much of what is currently called games playing in the rest of the system. According to government statistics in the aforementioned Treasury document, in the 1996 RAE, 32 per cent of the staff submitted worked in departments rated as excellent. By 2001, that had risen to 55 per cent.
	The RAE has been pretty popular among academics—at least in the research-based universities. There is one major reason for that. Despite all the work that is involved, it also involves peer-assessment and evaluation. Evaluation by one's peers is the prime reason for its success. As far as research universities are concerned, the QAA does not fall into that category and is therefore much less popular. The problems with the RAE are well known and I shall not go through them in detail. The excellent Roberts review, which has already been referred to, mentioned eight major difficulties with the RAE. The obvious one is that it is very expensive. The cost of the 2008 RAE, according to the Treasury document, is estimated to be at least £45 million, but some have suggested that the real cost may be closer to £400 million, because of the foregone research activity and productivity of the diversity of academics involved.
	Secondly, there is the core problem of distortion by evaluation mechanisms. All evaluation mechanisms distort the outcomes that they are supposed to measure, but in the case of the RAE, the distortion is pretty large. Finally, as the noble Lord, Lord Rees, mentioned, it is not clear that the RAE makes place for people who are not popular or whose ideas are not popular. They may even be scorned, but they are the very people who can be most productive and important for future generations.
	The Treasury document, the Budget Statement, seems to say that the RAE has met its demise. I am not sure that that is the normal route by which to announce that. Unless I have missed something, I ask my noble friend to comment on that. In my view, it is right to scrap the RAE; it did its job but it is no longer clear that it can do much more. Few people here seem to want an American-style competitive system, so if it is to be scrapped, we will have to pay a lot of attention to what will replace it. It is one thing to say, "Scrap it"; it is another thing altogether to say what should replace it if we are still going to have dual-funding as the Treasury says. So here is my list of things that might be worth considering as a replacement.
	First, it is simply not an option to dispense with the 2008 RAE. I do not think that the Government should even have suggested that it might be. I am not quite sure whether that means that certain science-based departments, for example, could opt out of it, but I think it should go ahead as planned. Secondly, in whatever replaces the RAE, we must not squander what has been achieved. The RAE has created an enormous database which very few other countries have, with the possible exception of Australia, and this must be used in the future. Thirdly, the RAE, or whatever replaces it, should be redesigned as a productive resource that helps the scholarly community at large and also helps more practical people who want to make use of research.
	Quite a few universities have explored how this might be achieved. Southampton and Loughborough universities have been in the lead by suggesting that all refereed articles might be self-archived on the internet if the permissions problem can be resolved, and a system called DARE in the Netherlands will be set up along these lines. This might make everything available to the international community, as well as provide a monitoring system. Fourthly, it is crucial that whatever replaces the RAE should not be simply science-driven; I very much agree with the noble Lord, Lord Norton of Louth, about that. In science, there is a very close correlation of more than 0.9 per cent between citation indices and the RAE results in quite a few subjects. That is not the case in the arts or the social sciences. We must ensure that this is not just a science-driven enterprise, and it is a pity that it emerged in a document that is purely about science and technology. In my view, you can exaggerate the degree to which science and technology will dominate in a knowledge-based economy. You need creativity in the application of technology just as much as you do in the invention of technology. Fifthly, the new system could be oriented to universities overall, rather than to departments or individuals. In other words, it could be allocated by the Government in the same way in which it is organised in universities. That might give the so-called new universities in particular some incentive in the future.
	In conclusion, I would say, "RAE: RIP", and, if noble Lords want another exploration, the words "Really Appropriate End". But it will not be easy to replace. I remind noble Lords that the Roberts report looked in detail at so-called metrics. This is the report's conclusion:
	"we are now convinced that the only system which will enjoy both the confidence and the consent of the academic community is one based ultimately upon expert review".
	The RAE might be dead, but I do not believe there will be sweet consensus over what follows it.

Lord Dearing: My Lords, it was a great privilege to listen to the noble Lord, Lord Rees, making is maiden speech and I look forward to hearing from him on many occasions. I have a bare-faced cheek to speak on this subject in the presence of so many experts, when I have no specialist knowledge of the subject. But I was stirred by the statement of the Chancellor in his Budget that the Government are setting out plans for a radically simplified allocation of the research funding that goes direct to universities. I understand that a study group has been, or is being, set up to come forward with proposals of metrics by the end of May for consultation. There seems to be a sense of briskness, in response to the view of the noble Lord, Lord Norton of Louth, that we must resolve this quickly.
	At least two references have been made to the study led by Gareth Roberts in 2003. I want in particular to quote the words at the beginning of his conclusion:
	"Some of us believed at the outset of the process that there might be some scope for assessing research on the basis of performance indicators, thereby dispensing with the need for a complex and labour-intensive assessment process".
	He goes on to say:
	"Whilst we recognise that metrics may be useful in helping assessors to reach judgements on the value of research, we are now convinced that the only system",
	is as the noble Lord, Lord Giddens, said. His first recommendation is that,
	"any system of research assessment designed to identify the best research must be based on the judgment of experts, who may if they choose, employ performance indicators to inform their judgement".
	There was a review of this issue by the House of Commons Science and Technology Committee the following year. It chided the funding councils for not taking fuller notice of the Roberts recommendations and suggested a range of measures which could be used to replace the peer review process in some areas, such as the physical sciences. It wanted this studied but doubted it would have been in time for the 2008 review. How much more that must be true of whether it would be possible and wise to do so starting in 2006 rather than in 2004. My whole experience of education has included, time and time again, occasions when important issues have been grasped and decisions implemented before they have been fully validated. The Government would be wise to move with due care in any changes.
	Gareth Roberts, to whom I have referred, indicated in an article he wrote in 2005 that he was impressed with the progress that had been made in developing and refining metrics. He has thought in terms of metrics running in parallel as a contributor to the methodology. He has said, as others have said, that the RAE has achieved some of the purposes for which it was created in increasing the quality and volume of research work.
	But, even though the tide—clearly in the Chancellor's mind—is going the way of moving with care, the criticisms of the RAE that have been voiced today have been mainly to do with the extent to which it is the thief of valuable time and how a bureaucracy develops bureaucracy. The noble Lord, Lord Giddens, suggested that the direct costs of academics and whoever is engaged in the panels was £45 million. He mentioned a much greater opportunity cost but I shall just take the direct cost of £45 million, which is less than 1 per cent of the grants made under the RAE over a five or six-year period. For a system that allocates £6 billion or £7 billion, 1 per cent of the cost does not seem unduly expensive to me.
	It has been suggested in an article by Barham Bekhradnia, who is the head of the Higher Education Policy Institute, in today's Independent that the cost of the research councils per pound expended is very much higher. I have heard of a figure of four times as much; he quoted a figure of 10. Although I cannot validate those figures, it sheds some light on the fact that the RAE may be cost-effective in direct terms.
	I think that the time has come to recognise that metrics have a major role to play—but, from what I hear, they are not fit for purpose in relation to the humanities, the arts, probably the social sciences and the law. We would be departing from a homogenous system if we were to move partially to one rather than the other. This suggests to me not to rush it. They should run as part of and alongside the 2008 review, but any willingness on the part of the Government—whatever the universities may say—to change it in an instant would be a touch unwise.
	I have one personal concern, to which the noble Lord, Lord Giddens, referred at the end of his remarks. That is on the importance of applied research in the reckoning of things. The United Kingdom, as has been said, scores highly in the outstanding quality of its curiosity-driven research, and in its quantity. Yet when it comes to reaping the benefits through products and services, we have not distinguished ourselves in terms of applications.
	I have read—I think this was in the Lambert review—that the American federal government commits $19 billion a year to university research, of which $4.4 billion or a touch over 20 per cent, if I recall his figure, is for applied research. With their specialist institutes, the Germans are also very good in that area. I would hope that if the metrics can develop in that way they will give weighting to applied research; or, perhaps, the issue is to see the third leg as a separate stream. I do not know the answer and do not think that anyone here today can say what the answers are. It is easy for us to criticise what we have; it is not so easy to say what should come in its place.
	Finally, I notice that the Chancellor referred to a threefold increase in the nation's earnings from education. I was impressed; I hope he can do it. It is a touch difficult, so I hope that the Chancellor—having made that important statement—will give support to the British Council and the universities to enable them to achieve their share of that threefold increase.

Lord Desai: My Lords, it is a great pleasure and privilege to take part in this debate. Earlier, I spoke on the Rural Payments Agency and had to confess that I was not a farmer; I was speaking purely as an academic. But this is one field in which I can say—to paraphrase the Prime Minister—that I bear the scars of RAE on my back. I was on the panel for economics in the first RAE, and in the latest one; for seven years, I was chairman of the research committee for LSE and saw through submissions for two RAEs.
	On balance, I am more for it than against it. It is hard to explain to the taxpayer why we complain about the RAE. Academics are asked whether they have written four pieces of published, refereed work in four years. At one per year, it is not slavery. When RAE was first introduced I had many colleagues pregnant with great ideas which were not going to fructify in the prospect of the coming RAE, but would perhaps in the next. We would ask them, "What is this great earth-shaking thing that you are going to do that you cannot do anything else in the meantime?"
	As a social scientist—I was actually an economist, doing more quantitative social science than other social sciences, but I also sat on an interdisciplinary board in the last RAE—I found that as long as there is peer review, measurement is acceptable because it is done by people who know all the difficulties of that subject. If academics complain too much about being assessed by their peers, someone else will be assessing them and be less regarding of their complaints.
	So, while we want to preserve our academic freedoms and creative opportunities, we have a RAE-type of peer review system based on some kind of grading. If you cannot grade, you cannot compare; not everything that everyone does is a work of genius. After all, as academics we mark scripts day after day, year after year. We know where to draw the line between a 2:1 and a first, or a 2:1 and a 2:2, and where something is 58 rather than a 59. That is part of our life. If we cannot do that to ourselves when it comes to research, we are abdicating our responsibility. Of course things are difficult—of course there are unpopular approaches. There are people, not in the mainstream, who could be doing good work. But a peer review mechanism can patiently go through these publications. For at least two summers in 1989 and 2001 or 2002, I sat for a whole month doing nothing but read submissions to the economics panel. The last time it was a glorious summer. I sat in my Hastings house, looking at the sea, unable to go out, and I read close to 500 articles.
	People on panels put in very serious work. It is important to do that. It is not that the Government are necessarily very generous to academics, but I am grateful for what they give. The taxpayer will not forgive us if we are not accountable for the money we get. We have to show that we make good use of that money.
	The point of research assessment is that it is a search and reward for excellence. It is not a democratic, popular exercise, where all shall have prizes, as it says in Alice in Wonderland. It is not a game in which all can have prizes. It is a game in which some people are good and get the prizes while the rest just have to try harder next time, and if they do not get a prize, tough luck.
	I was very impressed when the history panel, either last time or the time before, graded Oxford Brookes University higher than Oxford. That shows that these peer groups are not impressed by age, name or élitism. It is an exercise by people who are active in research to look at their colleagues who are also active in research; it is not in their interest to downgrade people.
	Obviously there is some game playing. As soon as rules are established, clever people will begin to find a way around them, especially because the funding rules are not transparent in light of the results. People have to play all sorts of games. That is inevitable in any system in which some flexibility is allowed for people to submit. The number of academics who submit, the kind of grouping that is made or where which colleague is placed are all matters of game playing, but that is not a bad thing.
	I want to say one more thing about different disciplines. It probably makes sense to say that the arts and humanities review board should look after arts and humanities. It probably has a different kind of research culture from natural sciences; it is certainly different from social sciences. Perhaps natural sciences, mathematics and social sciences and the arts should be dealt with under three different systems. That may lead to the problem of interdisciplinarity that the noble Lord, Lord Rees, referred to in his excellent maiden speech. But that is a small problem—it can be handled. It is important, however, to allow for different research areas having a different research culture.
	In conclusion, life is tough. If you want to be the best, you have to work hard at it. There is absolutely no reason why any consideration should be shown; if we are searching for the best people, they have to show that they are the best.

Lord Sutherland of Houndwood: My Lords, I thank the noble Lord, Lord Williams of Elvel, for initiating this debate. It is timely for all the reasons that have been given. I also congratulate my colleague, the noble Lord, Lord Rees of Ludlow, on an excellent maiden speech. He probes the farthest corners of the universe in his research and doubtless some of that light will shine in this place for years to come. We look forward to that.
	I recall the story of a series of Civil Service interviews, at the end of which the successful candidate was summoned and told that he had got the job—it was a very senior position. Just as he was leaving, he said, "Well, is there any advice you can give me?" The advice was: "You are evil, but you are necessary". That is the view that many of us took of the RAE when it was first set in place in the late 1980s. It has probably grown increasingly evil in the eyes of most. The question today is whether it is still necessary.
	Let us consider the situation in the late 1980s. I joined what was then called the Committee of Vice-Chancellors and Principals sometime in 1985. It had 55 members, which represented the total number of institutions at university level which were funded to do research. There are now three times that number of institutions in membership of the equivalent body, all of which might reasonably claim that they want to be funded for research. That poses the first question: affordability. Can we afford the system that we had, whereby you expected a certain volume of cash for research because you were a university of a certain size? It was seen very clearly by those who were responsible for the system that that was unlikely to continue.
	At that time, about 14 per cent of the age cohort went into higher education; the aspiration is now 50 per cent. That is a good aspiration, but it raises questions about the affordability of a system which allocates money for research partly on a per capita basis, as it used to do. I said "per capita basis". In fact, in the pre-RAE days, research money was given in a way that was not transparent; it was given in a way that was based on history—how much you had received previously; it was probably based on informed prejudice. The system's lack of transparency probably suited the vice-chancellors because the money came in a large black sack and could be spent in the institution according to the predilections of the vice-chancellors and/or their governing bodies. That system could not continue, especially with the cost of research going up. The costs of what we call "big science", engineering and medical research have been rising dramatically because of their nature.
	That is the background to the debate. We have already heard recounted today the various ways in which the system has begun to crack, twist and turn. People do play games, and all the faults which have been attributed to it are real. However, certain difficulties are worth highlighting. The system offers returns which diminish in relation to the amount effort you put into your application for funds. The amount that moves incrementally from one research assessment exercise to another has gone down. Therefore, if you hope to raise dramatically the flow of cash coming into your institution, it is almost, if not actually, impossible. In the same way, large sums of money do not move down the system in amounts which are sufficient to create significant new centres. The amount of money moving around has diminished despite the fact the costs of operating the system have gone up.
	While I endorse the points that have been made by others, I mention two other difficulties which have not been mentioned so far. The humanities face a very real problem—I shall come back to that briefly. A significant problem also faces single-subject or single-field institutions. I give the example of the Institute of Education in the University of London, which is highly regarded throughout the world. In the first RAE exercise, that institution scored the highest possible score: five. It could do no better. In the next exercise, it scored five once again, but the fund reduced for the obvious reason that the pot for education had not increased sufficiently to cover the rise in quality of research and RAE applications that came into the system. Therefore, there was no way in which it could enhance its grant or even maintain the level at which it was operating. That is a particular problem for single-field institutions, of which there are quite a number. For larger institutions, in which it was my happy position to work, we could move money around between departments, faculties and subjects; there was still a degree of flexibility. But for single institutions, the money comes per capita for teaching and at that stage there is an element for research that can go down without one's grade diminishing.
	I declare an interest. I am on the governing body of the Courtauld Institute of Art. I fear that it might find itself in a similar position, because however well one does, if one is a small institution with a single subject, that sets parameters for the outcome that one can hope for. We have been challenged, and rightly so, but it is not enough to show what the problems are. What are the ways in which we might go forward? I have my own few suggestions to add to those that I hope are taken into account. First, I stress that the evaluation and targeting of resource is still essential. It is necessary to have a mechanism for doing that. Secondly, judgments are required across the whole system and across all faculty areas. Metrics numbers are important, and I have no doubt that they will play an increasingly important part in the sciences and in engineering. For the humanities they are not equally effective but they are not irrelevant. The fact that someone reads one's papers is not irrelevant to their quality. It is not the sole criterion, but it is important. Metrics have their place. Judgment should be taken into account, but on the other hand should not be deduced simply from a single set of measures or numbers, because I have no doubt that they will be flawed.
	Thirdly, the noble Lord, Lord Giddens, has already pointed out that a huge volume of information has been built up. We know a great deal about the research capacity of our system of universities. That has been accumulated over nearly 20 years. My suggestion is that we should take that into account in making future allocations for research. That is not shooting in the dark. It is known which institutions have a long and continuing capacity to produce high quality research.
	I should like to suggest that a future research assessment exercise should move away from the single up to the larger grouping: faculties, institutes and universities. It is known which universities, institutes and faculties are constantly producing high quality research—there is a track record. Yes, they can go wrong—I will return to that point in a moment—but the amount of effort taken to come to a decision on such matters compared with the amount of money that moves in the system is disproportionate. I suggest that grants for research are made to institutions over whatever length, whether it is five, seven or 10 years, but that they are subject to review at institutional and faculty level as appropriate. This is a system that the MRC and the Wellcome Trust operate extremely well. If after five years one is not producing the goods then there will be a change in one's financial research circumstances, but there is not constant looking and shoulder leaning.
	Finally, if the funds are allocated in that way, it allows the possibility of institutions making judgments and backing winners that have not been picked up by the standard peer review process. The system is necessary, but has to change.